US jury verdict negative for Samsung Electronics' credit: Moody's - Korea Times

HONG KONG (Yonhap) -- A U.S. jury verdict in favor of Apple Inc. against Samsung Electronics Co. may bode ill for the South Korean electronics leader's credit outlook, posing a significant degree of uncertainty, Moody's Investors Service said Tuesday.

A California federal jury on Friday ordered Samsung Electronics to pay the iPhone maker US$1.05 billion in compensation, saying it infringed some of Apple's patents for mobile devices. The decision has yet to be finalized until Judge Lucy Koh makes her ruling on Sept. 20.

"The damages will not materially affect Samsung Electronics' financial profile because the company has abundant financial cushion and a strong ability to generate operating cash flow, as evidenced by its liquidity holdings of about $21 billion as of June 30," said Annalisa DiChiara, a vice president and senior analyst at Moody's.

"However, the impact from this verdict could be more material in the near term if it leads to a ban on the sale of Samsung Electronics' newer products in the U.S. market, and over the long term if it ultimately undermines its competitiveness in the mobile segment, which is the cash cow for the company."

The credit rating appraiser added Samsung Electronics, also the world's No.1 memory chip maker, as a major supplier for Apple, could see its semiconductor business gain from any increase in the sales of Apple's mobile phones or tablets in the near term.

Despite being embroiled in the heated rivalry, the world's two top smartphone makers are also partners, with Samsung Electronics being the supplier of display panels and chips for Apple's iPhone and iPad products.

Moody's, however, warned that there is a risk over the long term that Apple may reduce its dependence on Samsung Electronics for the components, which could result in additional negative implications for the Asian tech behemoth.

Samsung Electronics' expected response to the jury verdict, such as changes in research and development expenditures and schedule adjustments in new product launches, could also affect its competitive position and financial profile.