Apple (AAPL)
I don’t believe there is any reason to panic, I agree with Bernstein’s reasoning below.
It will take years and the outcome will be limited.
Apple (NASDAQ:AAPL) was sued by the U.S. Justice Department in a landmark antitrust case amid concerns about monopolization in the smartphone market, something Apple has vehemently denied.
While the case is likely to play out in the judicial system for years, investment firm Bernstein does not believe it will have much of a financial impact on the tech giant.
“While the DoJ’s charges are focused on iPhone, we do not see likely remediation as materially impacting Apple financially or undermining the iPhone franchise: worst case, Apple pays a fine, and loosens restrictions for competition across the iOS platform, which we believe will have limited impact on iPhone user retention or on Services revenues,” analyst Toni Sacconaghi wrote in a note to clients.
Sacconaghi believes any outcome is likely to take some time, likely between three and five years, given historical precedent from Microsoft (MSFT) and Google (GOOG) (GOOGL). And while it may not undermine Apple’s iPhone franchise, it could result in competitors having access to Apple’s APIs and ecosystem, level the playing field for future devices and result in some “regulatory overhang” for the stock.
“We think the DoJ creates some regulatory overhang on the stock, but see limited to no impact over the next several years,” Sacconaghi added.