Singapore consumer electronics maker Creative Technology continued its stock market gains yesterday after it sued Apple Computer Inc for alleged infringement of its MP3 music player patents, but the rising share price is unlikely to be sustained, analysts said.
Creative shares closed the morning session at S$9.85 dollars (US$6.27) per share, up $0.70 after investors bought the stock for a second straight day following news of the legal filings against its US rival and current market leader.
Creative said on Monday it filed a lawsuit and a patent complaint in the US against Apple aimed at halting the import and sale of the allegedly infringing Apple iPod and iPod Nano products in the giant US market.
It alleged that Apple iPod devices use patented software menus similar to those on Creative's Zen and Nomad brands. Creative said the US Patent Office issued the Zen patent to Creative on Aug. 9, last year.
Creative said in a statement it has asked the US International Trade Commission to investigate the alleged copyright violation.
A separate lawsuit lodged in the US District Court for the Northern District of California sought an injunction against Apple as well as undisclosed damages.
Analysts said Creative's stock market gains are unlikely to be sustained as the filings would divert company resources amid sharply falling earnings.
"Creative's patent infringement suit against Apple may bring some relief to the share price in the short term but in the long term, it will distract and divert management attention and company resources when both are needed to turn around the ailing business," Kim Eng Securities said.
"We do sympathize with Creative management. They probably feel it is against shareholders' interests to have a potentially lucrative patent in their hands and not use it. But we continue to be sellers of Creative until the fundamental business improves," the brokerage firm said.