Apple Inc. (NASDAQ:AAPL) Continues to Fight the Caltech Patent Dispute

Apple Inc. (NASDAQ:AAPL) Continues to Fight the Caltech Patent Dispute

Apple Inc. (NASDAQ:AAPL) Continues to Fight the Caltech Patent Dispute

Apple AAPL, +7.20% has suffered a blow in the long-running Caltech patent dispute. Last week, a US federal appeals court refused to invalidate a Caltech patent at the center of the dispute. As a result, Apple could face a massive fine.

Apple faces $838 million fine in Caltech patent dispute

In 2016, Caltech sued Apple and Broadcom AVGO, +6.13%. Caltech accusing them of infringing on its patents. According to Caltech, Broadcom used its technology without a license to make chips that end up in Apple devices. Broadcom chips with the disputed technology feature are in all Apple devices, according to Caltech. Therefore, Caltech wants to be compensated for the improper use of its technology.

In January, a jury cleared Caltech to pursue Apple and Broadcom for $1.1 billion in damages. However, Apple decided to fight back. The company went to court to invalidate one of the patents that the Caltech patent dispute case is based on. Despite the recent court ruling, Apple isn’t going to surrender. Apple and Broadcom plan to keep challenging Caltech’s case in court through appeals, according to Apple Insider.

The $1.1 billion damages awarded to Caltech require Apple to pay a $838 million fine, while Broadcom has a $272 million fine. Apple exited 2019 with $99 billion in net cash. The company has been deploying the cash toward a stock repurchase program. The stock repurchase program put $20 billion back in shareholders’ pockets in the December quarter. Apple aims to become net-cash neutral, which means that more stock repurchases could be on the way.

Financial blows from lawsuits

Although Apple has a massive war chest, the Caltech patent dispute could shrink its cash reserve. Recently, Apple agreed to part with as much as $530 million in an iPhone throttling case settlement. The settlement will slash the company’s cash reserve.

Therefore, Apple could lose nearly $1.4 billion between the iPhone throttling case settlement and the Caltech patent dispute. As a result, the company might return less cash to shareholders than it planned.

Notably, Apple faces huge financial losses due to lawsuits. Recently, the company warned that the coronavirus situation might crimp its revenue growth in the current quarter. The virus outbreak forced Apple to close its stores in China for several weeks, which impacted product sales. Also, Apple manufacturer Foxconn is struggling to run its factories, which means that Apple might not have enough products to sell.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 310.77.

The projected lower bound is: 259.72.

The projected closing price is: 285.25.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 34.1939. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 44.61. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -70. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 32 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 19.170 at 285.340. Volume was 109% above average (neutral) and Bollinger Bands were 123% wider than normal.

Open     High      Low     Close     Volume___
277.140 286.440 269.370 285.340 71,322,520
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 286.39 307.27 245.44
Volatility: 102 56 37
Volume: 70,301,000 41,091,904 29,878,232

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

APPLE INC is currently 16.3% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AAPL.O and have had this outlook for the last 13 periods.

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