As investors fret about what impact Apple's victory in a key patent case will have on Samsung Electronics, analysts say it's not time yet to press the panic button since an outright ban of the South Korean tech giant's flagship smartphones is unlikely at this stage.
Shares in Samsung, the world's largest technology firm in terms of revenue, fell more than seven percent on Monday after a jury on Friday found Samsung had copied key features of Apple's (AAPL) iPhone and iPad and granted Apple $1.05 billion in damages.
The ruling could lead to an outright ban in the U.S. on the sale of top Samsung products and bolster Apple's position in the smartphone market.
Still, analysts say new products and Samsung's flagship Galaxy S3 are unlikely to be banned and the company is likely to adapt quickly to setbacks and that should help the shares recover from a short-term drubbing.
"This particular settlement goes towards very certain handsets and that doesn't even include the Galaxy S3," said Melissa Chau, Research Manager Client Devices at IDC at Asia-Pacific in Singapore on CNBC Asia's "Cash Flow. "
"And because Samsung is quite nimble about releasing new products, they can probably move around this quickly. The patent ruling does show they have to move more carefully from here," she added.
Shaun Cochran, Head of Research, South Korea, at CLSA in Seoul, says that instead of banning Samsung's Galaxy S3 smartphone, the U.S. courts are more likely to order Samsung to show how the phone does not infringe patent laws.
"If Samsung was forced to stop selling the Galaxy S3 that would be a concern, but it doesn't look that way yet," he said. "Samsung's strategy is that future products do not infringe patent laws. The ruling is negative but Samsung's long-term strategy is intact, so there is no need to panic at the moment."
Sales of smartphones have driven Samsung's profit growth and account for about 70 percent of its total profits. The Korean firm had a net profit of $4.5 billion in the second quarter. Samsung sold about 50 million phones in the April-June period, almost twice the number of iPhones sold.
It's no surprise then why investors were dumping Samsung shares on Monday and snapping up the shares of other South Korean phone makers that may stand to benefit at the expense of Samsung. Shares in LG Electronics, for instance, were up 4 percent Monday.
Apple has said it will file for a sales injunction against Samsung, while Samsung's top executives held an emergency meeting on Sunday to work out their strategy.
"It is a very sweet victory for Apple... But what is really important is that it enhances Apple's brand as an innovator in both the iPhone and iPad markets. It provides a strong disincentive for future copying of its products," Brian White, Senior Analyst, Topeka Capital Markets told CNBC Asia's "Squawk Box" on Monday.
Equity strategists at Citigroup said that Samsung's third-quarter operating profit was likely to be affected by provisioning for the damages Samsung will have to pay Apple, but agreed that Samsung's flagship products such as the Galaxy S3 would not be affected by the ruling.
Citigroup recommended buying Samsung shares, which have fallen some 12 percent since hitting three-month highs in mid-August.
"Given about $10 billion of market capitalization decline in the past two weeks, potential negatives from the U.S. court ruling have been reflected in the price, in our view," Citigroup said in a note. "We recommend accumulating on the dips as Samsung will continue to sustain high-end smartphone leadership with the synergy with in-house leading-edge components."
Analysts say Friday's ruling is part of a long-drawn out battle to dominate the smartphones market, with Samsung and Apple locked in legal disputes around the world. On Friday, ahead of the U.S. court ruling on the Apple-Samsung patents case, a South Korean court ruled that Samsung did not copy the look and feel of the iPhone.
"What we need to see is that this (Friday's U.S. ruling) is the first battle victory for Apple in what is going to be a long war," said CLSA's Cochran.
- By CNBC's Dhara Ranasinghe
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