Alexa

Deutsche Bank neutral on HTC amid Apple's patent win over Samsung

Deutsche Bank neutral on HTC amid Apple's patent win over Samsung

Taipei, Aug. 28 (CNA) Taiwan's HTC Corp. is likely to solve the patent issues with its software design following Apple Inc.'s victory in a patent suit against Samsung Electronics Co., Deutsche Bank AG said Monday in a report. A U.S. jury ruled Aug. 24 that Samsung, the world's largest maker of Android-based phones, had infringed on six of the seven contested patents by Apple, including both utility and design patents. Two of the patents Apple won against Samsung in the verdict are also included in Apple's second patent infringement lawsuit filed with the United States International Trade Commission (USITC) against HTC. The 381 patent refers to a function of "bouncing back when scrolling beyond the edge of a page," and the '915 patent is described as "using a single finger to scroll or two fingers to zoom into content with a reverse-pinch gesture." Deutsche Bank maintained a "hold" rating on HTC and a target price of NT$250 (US$8.35), saying that it is relatively easy for HTC to solve the patent issues with respect to software design. "We cannot predict the USITC verdict but we think the lawsuit will not materially change HTC's competitive position considering its strong R&D capability," William Yang, research analyst at Deutsche Bank, wrote in the report. "We believe HTC could change its software designs to work around the patent issues if Apple wins the case in an initial ruling on Nov. 7," Yang said. In addition, as one of the four key smartphone partners in Microsoft Corp.'s Windows 8 system, HTC is expected to introduce a few Windows 8 models in the fourth quarter of 2012, he added. Yang said Microsoft may potentially subsidize marketing expenses for Windows 8 phones, and that such phones should have fewer patent conflicts with Apple. Japan's Nomura Holdings Inc. kept its "reduce" rating on HTC and its target price of NT$200, saying HTC's lawsuits against Apple remain a cloud over the Taiwanese smartphone maker. However, as Samsung's products are at risk of not shipping to the U.S., Nomura said, this could be positive for HTC, which is the third-largest smartphone vendor in the U.S. market and has good relationships with operators there. Moreover, the likely lawsuit risks and royalty costs for Android vendors would raise the cost of Android smartphones, which may be positive for top-tier makers of Windows 8 phones such as HTC, Samsung, Nokia Oyj and Huawei Technologies Co., the Japanese brokerage said. HTC shares closed down 3.50 percent at NT$248.5 in Taipei on Tuesday. (By Jeffrey Wu)