Samsung witness says Apple's damages closer to $519 million, not $2.5 billion
An expert witness called by Samsung has testified that, according to his calculations, Samsung's US profit margins were 12 percent rather than 35.5, meaning Apple's damages should be limited to $519 million, well below the minimum of $2.5 billion it is demanding.
According to reports by CNET and Reuters
Michael Wagner, formerly a partner at PriceWaterhouse, was called by Samsung to refute the calculation of Apple's expert witness Terry Musika, who had said his team spent 7,000 hours and $1.75 million to analyze Apple's damages.
"I can assure you, it's not me sitting at a desk with a calculator, doing calculations," Musika said in his testimony on Monday, in which he said Samsung had earned 35.5 percent margins over the period from mid-2010 through March 2012, for a total of $8.16 billion in U.S. revenue. Apple is seeking over $2.5 billion in profits from Samsung.
Under U.S. law, Apple can demand all of Samsung's profits on offending devices if the company is found to have infringed upon its design patents. In contrast, infringement of technical patents can only result in a demand actual damages.
Nine versions of Samsung financials
Apple charged that Samsung produced nine different versions of its financials during the evidence gathering process, something that Samsung's vice president of finance and operations Timothy Sheppard did not deny during Apple's cross examination.
Due to other delays by Samsung, its own expert had only three weeks to perform his calculations. Wagner testified, "I didn't know what I was rebutting," and said, "I had three weeks to do all my work. This was an enormous amount of work in three weeks."
Wagner said that Musika's "total calculation of total profits did not include the total cost to figure out the profits," explaining that Apple's witness had left out administrative costs as well as sales, marketing and research and development. He also charged that Apple had failed to account for its own supply issues in having enough iPhones and iPads to sell while Samsung was selling its own products.
Wagner also noted that his version of Samsung's profits assumed a period beginning April 2011, as opposed to Musika's which started its profit analysis the middle of 2010, a period twice as long.
One version of costs created especially for Samsung's witness
Under cross examination, Wagner admitted that Samsung had provided him cost information that was prepared by Samsung specifically in response to Apple's suit.
Under Wagner's calculations, Samsung earned a profit margin of just 12 percent on its high end smartphones and tablets at the subject of the lawsuit. Apple's Musika had calculated a profit margin of 35.5 percent.
Globally, over in the last quarter Samsung earned only half as much as Apple while selling twice as many phones, but most of its sales are lower end models that bear little resemblance to Apple's devices.
According to reports by CNET and Reuters
Michael Wagner, formerly a partner at PriceWaterhouse, was called by Samsung to refute the calculation of Apple's expert witness Terry Musika, who had said his team spent 7,000 hours and $1.75 million to analyze Apple's damages.
"I can assure you, it's not me sitting at a desk with a calculator, doing calculations," Musika said in his testimony on Monday, in which he said Samsung had earned 35.5 percent margins over the period from mid-2010 through March 2012, for a total of $8.16 billion in U.S. revenue. Apple is seeking over $2.5 billion in profits from Samsung.
Under U.S. law, Apple can demand all of Samsung's profits on offending devices if the company is found to have infringed upon its design patents. In contrast, infringement of technical patents can only result in a demand actual damages.
Nine versions of Samsung financials
Apple charged that Samsung produced nine different versions of its financials during the evidence gathering process, something that Samsung's vice president of finance and operations Timothy Sheppard did not deny during Apple's cross examination.
Due to other delays by Samsung, its own expert had only three weeks to perform his calculations. Wagner testified, "I didn't know what I was rebutting," and said, "I had three weeks to do all my work. This was an enormous amount of work in three weeks."
Wagner said that Musika's "total calculation of total profits did not include the total cost to figure out the profits," explaining that Apple's witness had left out administrative costs as well as sales, marketing and research and development. He also charged that Apple had failed to account for its own supply issues in having enough iPhones and iPads to sell while Samsung was selling its own products.
Wagner also noted that his version of Samsung's profits assumed a period beginning April 2011, as opposed to Musika's which started its profit analysis the middle of 2010, a period twice as long.
One version of costs created especially for Samsung's witness
Under cross examination, Wagner admitted that Samsung had provided him cost information that was prepared by Samsung specifically in response to Apple's suit.
Under Wagner's calculations, Samsung earned a profit margin of just 12 percent on its high end smartphones and tablets at the subject of the lawsuit. Apple's Musika had calculated a profit margin of 35.5 percent.
Globally, over in the last quarter Samsung earned only half as much as Apple while selling twice as many phones, but most of its sales are lower end models that bear little resemblance to Apple's devices.
Comments
Quote:
Originally Posted by AppleInsider
Nine versions of Samsung financials
Apple charged that Samsung produced nine different versions of its financials during the evidence gathering process, something that Samsung's vice president of finance and operations Timothy Sheppard did not deny during Apple's cross examination.
NINE different versions. And all of them lies. Samsung is known for cooking its books to make things look "smooth".
If they want to prop up there stock price, they release one set of financials. If they want to claim no damages, they cook up another. Pitiful, really.
research and development costs. LOL
Release the P&L - I'm sure the masses can easily decide the GP...
How does the size of Samsung's profit margin affect the damage to Apple's earnings?
Less profit means less damages. It's that simple. The offended party will be awarded whatever profit the offender got not what profit that was missed out on.
Quote:
Originally Posted by Banana Bonanza
How does the size of Samsung's profit margin affect the damage to Apple's earnings?
Exactly. I guess if I copied the iPhone and sold 10 million of them at break-even, there wouldn't be any damages at all, right?
Additional to the administrative fees, R&D, etc. I wonder if they factored in the fuel spent for apple employees coming to work, also the light bill, water bill and things like that, too.
Aside from "cooked books" and other earnings anomalies..
35% margin is absurdly high for consumer electronics. Maybe if you're controlling the supply chain and have a market lock (like Apple), you'll pull that type of rake. Otherwise, seems pretty dang high.
How about when you yourself produce many of the components in that supply chain. I think Samsung is very capable of having a 35% profit margin.
So basically, Samsung would fess up if the price (fine) is right?
deleted
Covering all bets plus their ass.
That was my first thought.
Quote:
Originally Posted by dasanman69
How about when you yourself produce many of the components in that supply chain. I think Samsung is very capable of having a 35% profit margin.
True, I'm sure supplying your own components does help. Though carrier subsidies are probably giving Apple a significantly better margin. You could also factor in whatever Apple makes on app and media purchases, if there was an accurate way to do so
Does any other company make nine different versions of financial statements? How can they get away with that?!
Subsidies have nothing to do with it. Even when a phone goes down in price the full retail price stays the same or doesn't go down much.
Originally Posted by jungmark
Does any other company make nine different versions of financial statements? How can they get away with that?!
By… paying off the same people nine times?