Apple
stock is having a rough couple of months with doubts about demand for its new iPhone. The mood is unlikely to be lightened by news it faces a potential ban on imports of certain models of its Apple Watch.
The U.S. International Trade Commission on Thursday found Apple (ticker: AAPL) had violated patents held by medical-technology company
Masimo
(MASI) over measuring blood-oxygen levels. It issued a limited exclusion order on certain Apple Watches, banning their import to the U.S.
It isn’t a huge blow to Apple. Sales of Wearables, Homes, and Accessories products—the category that includes the Apple Watch—came to $8.28 billion in the company’s latest quarter, out of the company’s total net sales of $81.80 billion. However, it is a headache the company could do without as it looks to fight back against criticism that its latest iPhone model showed a lack of innovation.
Apple now has a few options. The company could make changes to its smartwatches, it could reach a settlement, or it could hope to successfully appeal the decision.
“While today’s decision has no immediate impact on sales of Apple Watch, we believe it should be reversed, and will continue our efforts to appeal,” a spokesperson for Apple told Barron’s.
Apple has filed its own patent infringement lawsuits against Masimo and is set to make a case to the Biden administration that an import ban isn’t in the best interest of U.S. consumers. The administration has the option to overrule the commission’s decision within 60 days.
Masimo shares rose 5.4% in trading on Friday. Apple was up 0.9%, having fallen 14% over the three months through Thursday’s close.
The bigger point of attention in Apple’s September-quarter earnings report next Thursday will be iPhone sales. Analysts at J.P. Morgan recently cited signs that demand for the iPhone 15 is weaker than it was for its predecessor at the same time last year.
Apple is expected to report quarterly sales of $84.67 billion, down from $90.60 billion for the same period the previous year, according to the consensus call among analysts tracked by FactSet. Sales of iPhones are expected to fall to $41.53 billion from $42.84 billion.
Write to Adam Clark at [email protected]
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