Apple v Samsung: Judge rejects Apple plea for sales ban

A US judge has rejected Apple's plea to ban sales of Samsung's smartphones that violate its patents.

Apple had requested the ban after a jury ruled earlier this year that some Samsung products had infringed Apple's patents.

Samsung was also ordered to pay $1.05bn (£650m) in damages, a ruling the South Korean firm has since challenged.

However, the judge said there was not enough evidence that the infringed patents had hurt Apple's US sales.

"The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple's patents," District Judge Lucy Koh said.

"Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions."

Losing steam?
 
Since winning $1.05bn damages in August this year, Apple has suffered setbacks in its various legal clashes with rivals.

Last month, Apple was asked to disclose the details of its patent-sharing deal with HTC to Samsung.

It has also lost an appeal against a UK ruling that Samsung had not infringed its design rights.

The US technology firm was also asked by a UK High Court to publish a statement on its website admitting that Samsung had not infringed its designs.

Meanwhile, sales bans sought by Apple against Samsung's Galaxy Nexus phone and Samsung's Galaxy Tab 10.1 tablet computer in the US were also lifted in October.

In November, a judge in the US dismissed a case brought by Apple alleging that Google's Motorola unit was seeking excessive royalty payments for patents.

"The momentum that Apple had gained in the wake of the big billion dollar judgement seems to be losing its steam," Manoj Menon, managing director at consulting firm Frost & Sullivan told the BBC.

"It appears that Apple will find it increasingly difficult to convince courts around the world that it has been hurt by alleged patent infringements."

Patent sharing
 
The smartphone market has seen tremendous growth over the past few years and Apple and Samsung have emerged as two of the biggest players in the sector.

The success of Apple's iPhone has been a key driver of its growth, while Samsung has reported record quarterly profits helped by the popularity of its Galaxy range of smartphones.

However, as their market share has increased, so has the intensity of their legal battles with each other.

The two firms have filed legal cases against each other in more than 10 countries, each accusing the other of violating its patents.

However, analysts said that it was time the two companies sat down together and agreed on an amicable solution to their tussles - a move that has also been suggested previously by a judge in the US.

Mr Menon of Frost & Sullivan said that as manufacturers look to develop even more advanced phones, they will eventually need to use technologies, the patents for which may not belong to them.

"What we are seeing is a convergence of different technologies into one device," he said.

He explained that for innovation to continue in the sector it was key that various companies agreed to licensing terms for their patents.

Last month, Apple agreed such a deal with Taiwanese phone-maker HTC as it signed a 10-year licence agreement that ended their legal battle over patents.

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Morgan Stanley is fined $5m for Facebook IPO disclosure

Morgan Stanley has been fined $5m (£3m) by the Massachusetts securities regulator for "improperly influencing" analysts before Facebook's share sale.

According to the regulator, there was a conflict of interest when a senior banker coached a Facebook official on what to say to analysts.

It also claimed that the two firms failed to tell all investors that revenues may be lower than forecast.

Many investors criticised Facebook as its shares fell following the listing.

The sale, which was over-subscribed and took place in May 2012, was one of the most hotly anticipated stock floatations in recent history and valued the eight-year-old firm at $104bn.

Facebook sold close to 421 million shares, at $38 a share, raising $16bn.

However, the hype surrounding the listing waned shortly after trading started on the New York stock exchange as shares fell below their listing price on concerns about the pace of future profit growth.

Facebook's shares have dipped almost 30% since its listing in May.

Morgan Stanley did not confirm or deny the allegations by the regulator.

However, it said in statement that it was pleased to have reached a settlement and to have put the matter behind it.

"Morgan Stanley is committed to robust compliance with both the letter and the spirit of all applicable regulations and laws," it added.

Mobile ads
 
The regulator's case focused on events tied to Facebook and its road show, which promoted the share sale to investors.

It alleged that during this period, Facebook informed Morgan Stanley that it expected revenue for the second-quarter of the year to be at the lower end of its forecast of between $1.1bn and $1.2bn.

Analysts had initially forecast that it would either be at the higher end of that range, or above it.

At the same time, Facebook also said that annual revenues for 2012 may miss its initial forecast of $5bn by as much as 3.5%.

The problem affecting Facebook was that an increasing number of people were visiting its website via mobile devices, such as phones or tablet computers.

Facebook warned that because it did not display advertising on the mobile versions of its website, then there may be a decline in revenue from ad sales, its biggest source of income.

According to the Massachusetts investigation, Facebook first filed an amendment to its listing documents on 3 May, in which it warned that revenue growth may be "negatively affected" by this shift from personal computers to mobile devices.

This was followed by a second amendment on 9 May in which it highlighted the weaker revenue trend for the second quarter of the year, running from the start of April to the end of June.

The Massachusetts investigation claims that Facebook told a senior Morgan Stanley investment banker on 8 May about the problem.

The banker then helped orchestrate calls between the company and analysts.

In his order, William Galvin, the Secretary of the Commonwealth of Massachusetts, said that the bank helped Facebook give out this information "without creating the appearance of not providing the underlying trend information to all investors".

In this way, Facebook said it would be able to brief analysts covering its stock about the problems, "without someone claiming we are providing any selective disclosure to big accounts only".

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Obama and Boehner meet as fiscal cliff talks pick up

US President Barack Obama and House of Representatives Speaker John Boehner have met at the White House as talks on avoiding the "fiscal cliff" gather pace

Mr Boehner has signalled he would agree to raising tax rates for those earning more than $1m (£620,000) per year.

The 45-minute meeting follows face-to-face discussions on Thursday and a phone call between the two on Friday.

A deal must be reached by 1 January, or a combination of steep tax rises and sharp spending cuts will take effect.

Mr Boehner has reportedly also said he would accept as much as $1tn in new tax revenue over 10 years and would raise the debt ceiling to ensure the government is funded for a year.

In exchange, it is reported that he would like the White House to agree to $1tn of spending cuts.

"Our position has not changed. Any debt limit increase would require cuts and reforms of a greater amount," Boehner spokesman Brendan Buck told the Associated Press.

Neither side has released details from Monday's meeting.

'Necessary balance'
 
White House Press Secretary Jay Carney acknowledged on Monday that there had been a "change in tone, and in some cases, a change in position from different Republicans" on the issue of tax increases.

But he added: "Thus far the president's proposal is the only proposal that we have seen that achieves the balance that's so necessary."

The president's proposal to avoid the fiscal cliff had called for $1.6tn in new tax revenue over 10 years. Mr Obama has previously insisted that he will not sign a deal that does not raise tax rates on earnings over $250,000.

More recently, the White House has suggested it would agree to a deal that generates less new tax revenue. Many Republicans are philosophically opposed to raising taxes.

As the parameters of a possible deal begin to take shape, correspondents say there may now be renewed focus on whether Democrats agree to changes to popular entitlement programmes.

Harry Reid, the top Democrat in the Senate, has indicated that it is likely lawmakers will need to return to Washington between Christmas and New Year to vote on a deal to avert the fiscal cliff.

"We will see if anything changes, but it appears that we're going to be coming back the day after Christmas to complete work on the fiscal cliff," Mr Reid said on Monday.

Details of a deal
 
Correspondents say about $450bn from Mr Boehner's offer of $1tn in new tax revenue would be generated by increasing the tax rate to 39.6% from 35% for income over $1m.

The remainder would come from closing loopholes and limiting tax deductions, and by slowing inflation adjustments to tax brackets.

The $1tn in spending cuts that Mr Boehner is said to have asked for are expected to come primarily from healthcare programmes for the elderly, they say.

But some Democrats have indicated they are not prepared to consider such changes to major government provisions.

Economists have warned that the "fiscal cliff" would suck about $600bn out of the economy, possibly sending the US, which is experiencing a tepid economic recovery, back into recession.

The measures were partly put in place within a 2011 deal to curb the yawning US budget deficit.

Along with the tax rises and spending cuts due to take effect on 1 January, extended benefits for the long-term unemployed and a temporary cut to payroll taxes are also scheduled to expire at the end of the year.

Business leaders and Ben Bernanke, chairman of the US Federal Reserve, have warned that uncertainty over the fiscal cliff is already having a negative effect on the economy.

International observers, including Christine Lagarde, head of the International Monetary Fund, have warned that effects of going over the fiscal cliff would ripple out to the rest of the world.

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US consumer prices fall as petrol costs drop

US consumers prices fell in November due to a sharp drop in petrol prices, according to official figures, as inflation in the economy remained weak.

The consumer price index fell 0.3% from October, the first decline since May, the US Labor Department said. 

The gasoline index fell 7.4% in November, which more than offset gains in prices elsewhere.

Stripping out food and energy costs, "core" prices rose by 0.1% in November, the figures showed.

Over the past year, consumer prices have risen 1.8%, while core prices have increased by 1.9%.

The US economy remains fragile and, earlier this week, the US central bank pledged to continue buying bonds to keep actual borrowing rates low until the labour market outlook improves substantially.

Though the unemployment rate fell to a four-year low of 7.7% in November, statistics suggest that much of the decline in the jobless rate since 2008 has been due to people dropping out of the workforce, either due to retirement or because they have given up seeking work.

The Federal Reserve also cut its economic outlook. It now expects the economy to grow between 1.7-1.8% this year, down from 1.7-2.0% it previously expected.

The latest data came against the backdrop of the looming "fiscal cliff" - the tax increases and spending cuts due to be implemented in January if Congress and the White House do not strike a deal.

The Fed chief said last month that all of the changes would "pose a substantial threat to the recovery".

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Is Apple starting to lose its bite?

Apple's share price has fallen more than 25% since its record high set three months ago - no less than five analysts have lowered their price targets for the U.S. technology giant in the past few days.

To make matters worse for Apple, Android smartphones continue to reign supreme in global market share: for every one such device running on Apple's iOS, about seven smartphones running Android's operating system are computing away.

Is Apple losing its bite? In the short-term, investors and analysts seem to think so. But in the medium-term, they believe milestones exist that can put the shine back on Apple's share price and image.

Apples do fall  

On September 19, Apple's share price closed at a historic high of $702.10, exactly one week after the debut of the iPhone 5. But as the freshness of the device's latest iteration wore off, so did the bullishness for Apple's stock. On December 17, it fell below the psychological $500-mark, to slide below $497 in pre-market trading. The company's share price quickly climbed above that threshold that day but still sits at lows not seen since mid-February.

The dive in Apple's share price has also been attributed to a cut in orders from its parts suppliers. One fear is that Apple may have produced too many iPhone 5s in the current quarter and it may now need to scale back manufacturing in 2013. Analysts from UBS, Citibank, Mizuho, Canaccord and Pacific Crest all cut their price targets on Apple leading to a further drop in the Cupertino-based company's share price.

Another fear is that the iPhone 5 has not been selling as well as previous versions; however that has now been debunked. A record 19 million iPhone 5 units are estimated to have been sold in the U.S. in the fourth quarter of 2012, according to a survey by Morgan Stanley, which would represent a 33% year-on-year increase. Apple also sold more than two million iPhone 5S units in China when it debuted this past weekend.

"Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China," said Tim Cook, Apple's CEO, in a press release.

"The Company remains on track to launch in 100 countries by the end of the year. In our view, this is a positive," said RBC's Amit Daryanani.

Comparing Apples To Androids

But for all the hope and the hype that surrounds Apple, Android smartphones reign supreme in terms of market share by operating system.

Investment research firm Morningstar says Apple has much work to do in 2013. "Although Apple has a robust product pipeline and ample opportunity to gain share in its various end markets, short product life cycles and intense competition will prevent the firm from resting on its laurels," it wrote in a statement.

Globally, less than two in ten smartphones that shipped in the third quarter of 2012 sported Apple's iOS operating software. But in that same period, Google's Android platform ran 75% of smartphones around the world. This also represented a 91.5% increase over the same quarter in 2011, according to International Data Corporation.

Apple's iOS claimed just under a 15% market share in the same period.

Apple's next crop

Despite the recent release of the iPhone 5, analysts are already looking ahead to Apple's potential product releases for 2013 to pull the company's share price up.

"For Apple we believe the sell-off is nearing a bottom but we acknowledge the fears around margins, maps, emerging markets, competition and execution. The company clearly needs to ease these concerns in the near future," said Barclays' Ben Reitzes. "It may take another round of new products and innovations to regain investor confidence and help drive another run."

One analyst from Jefferies predicts an iPhone 5S may ship in the summer of 2013 and that iPhone 6 prototypes already exist.

Speculation is also growing that Apple may debut an Apple television set, a so-called iTV, by the fall of 2013. In a recent Morgan Stanley survey, 47% of 1,568 respondents said they were "somewhat interested" or "extremely interested" in buying an Apple-branded TV set which could translate into 56 million units being sold in the U.S. alone.

The report added a potential iTV rollout represents a new $13 billion opportunity for the world's most valuable company.

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