Touch-panel manufacturer TPK Holding Co’s (宸鴻) latest legal action against Nokia Oyj and several Taiwanese and Chiense companies is not aimed at raising earnings, but rather at maintaining its technology leadership over its rivals, analysts said.
On Wednesday, TPK said its Chinese subsidiary, TPK Touch Solutions (Xiamen) Inc, had filed patent infringement lawsuits in China against the Finnish company, Taiwanese cellphone maker Compal Communications Inc (華寶通訊), Chinese touch-panel supplier O-film Tech Co Ltd (歐菲光科技), electronics retail chain Suning Appliance Co (蘇寧電器) and trading firm Xiamen Zhongbo Trade Co (中博貿易).
TPK says that these companies have infringed upon its patented single-sided indium tin oxide (SITO) technology, for which it holds a patent in China. It is seeking 92.91 million yuan (US$14.9 million) in damages, the company said in a stock exchange filing.
LEADERSHIP
“The total damage claims are about NT$430 million, which translates into NT$1.26 in earnings per share [EPS] for TPK, but that represents just a tiny piece of the company’s forecast EPS of NT$42.21 for last year and NT$54.79 for this year,” First Capital Management Inc (第一金證券投顧) said in a note on Thursday.
First Capital said the lawsuits would likely see preliminary results in about 10 months to 15 months, but it viewed the earnings contribution from this move as “rather limited.”
“TPK’s lawsuit could put it at risk of losing orders in the future, so we believe that the company’s purpose is not to seek financial restitution, but to safeguard its lead in the touch-screen industry,” First Capital said.
JPMorgan Securities (Taiwan) Ltd analyst Narci Chang (張恆) said in a separate note on Thursday that the action was aiming to put pressure on TPK’s competitors, who have been actively pursuing SITO, one-glass-solution or touch-on-lens technologies.
“TPK wants to use this case to retain its technological leadership in the industry and showcase to customers the importance it places on intellectual property protection,” Chang wrote. “The firm’s end-goal is to enable fair competition in the industry and protect customers from any further patent infringement risk.”
RESEARCH
Based on JPMorgan’s estimate, TPK’s research and development spending has reached US$340 million over the past three years, which the US brokerage said is the equivalent of the total sum spent by all other touch-panel makers combined.
TPK shares closed 0.20 percent lower at NT$489 during Friday’s trading.
JPMorgan maintained an upbeat view about TPK’s dominance in the touch-panel market, setting a a 12-month target price of NT$700. First Capital took a more cautious view, offering a target price of NT$603 because it said that TPK may have a slow quarter this quarter.
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