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Sonos (SONO) Gets a Favorable Ruling in the Patent Case

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Sonos SONO recently received a favorable ruling from a U.S. Trade Court, prohibiting Google from importing products that violate Sonos' smart-speaker patents, per a report from Reuters. Nevertheless, Google can continue to import products that the company has revamped to prevent violating the patents, added the U.S. Trade Court.

Since 2020, Sonos and Google have been entangled in patent litigation over multi-room audio technology, per Reuters. Citing a Sonos regulatory filing, the report further added that the companies are battling cases lodged in courts of California, Germany, Canada, France and the Netherlands.

According to Reuters, the U.S. International Trade Commission upheld a prior decision ruled in August 2021 that Google indeed breached five of Sonos’ patents.

Google spokesperson was quoted by Reuters saying that the company will continue to protect itself against Sonos' ‘frivolous claims’ regarding partnership and intellectual property.

Sonos, Inc. Price and Consensus

Sonos, Inc. Price and Consensus
Sonos, Inc. Price and Consensus

Sonos, Inc. price-consensus-chart | Sonos, Inc. Quote

Opportunities Galore for Sonos

Sonos is benefiting from solid demand for its products in the booming global audio market. The company is well-poised to gain from its proprietary software that serves as the backbone of Sonos sound system, differentiating it from other leading players in the worldwide market. The software enables an open platform for content partners with features like smart audio, multi-room experience and wireless home theater configurations.

Increasing client base and market share, as well as diverse product lines along with a solid brand recognition act as tailwinds. Apart from its proprietary Sonos app and software platform, some of the major competitive factors in the booming audio market that act as tailwinds are meticulous customer support service, product quality and design, ease of setup and use, network technology, price and wireless functionalities.

Active patents and patent applications are also an essential part of Sonos’ business. The company enters into various licensing agreements with third-party content partners so that its customers can get first-hand access to its diverse range of unique content.

In the last reported quarter, Sonos’ revenues rose 5.8% year over year to $359.5 million, driven by higher demand for its products despite supply constraints stemming from the pandemic.

However, forex volatility due to international presence as well as increasing research and development costs are a concern for Sonos amid stiff competition in the smart speaker market.

Zacks Rank and Other Stocks to Consider

At present, Sonos sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks worth consideration in the broader technology sector include Salesforce CRM, Hewlett Packard HPE and Microsoft MSFT. While Salesforce and Hewlett Packard sport a Zacks Rank #1, Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share, up 6.4% in the past 60 days. The long-term earnings growth rate of the company is pegged at 16.8%.

Salesforce’s earnings beat the Zacks Consensus Estimate in all of the preceding four quarters, the average surprise being 44.2%. Shares of the company have increased 6.6% in the past year.

The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate of the company is pegged at 5.8%.

Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of the company have rallied 40% in the past year.

The Zacks Consensus Estimate for Microsoft’s fiscal 2022 earnings is pegged at $9.13 per share. The long-term earnings growth rate of the company is pegged at 12%.

Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.8%. Shares of the company have surged 46.2% in the past year.


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