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The Zacks Analyst Blog Highlights: Apple, Motorola Mobility Holdings, BP Plc, Transocean and Halliburton

AAPL MMI BP RIG HAL

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For Immediate Release

Chicago, IL – March 6, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple Inc. ( (AAPL - Analyst Report), Motorola Mobility Holdings Inc. ( (MMI), BP Plc ( (BP - Analyst Report), Transocean Ltd ( (RIG - Analyst Report) and Halliburton Company ( (HAL - Analyst Report).

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Here are highlights from Monday’s Analyst Blog:

Apple vs. Samsung: War Continues

Apple Inc. ( (AAPL - Analyst Report) and Samsung’s court battles are nothing new. Both the companies have been filing patent infringement cases against each other in almost every continent in which they are present. In the latest development, two patent infringement cases brought on by Apple and Samsung against each other were dismissed by a regional court in Mannheim, Germany.

Apple’s claim that Samsung has infringed its mobile devices’ ‘slide-to-unlock technology’ was dismissed by the German court. Samsung, in its defense, argued that its slide to unlock technology was different from that of Apple’s in terms of "gestures of any path between start and target".

Separately, Samsung’s claim that Apple was violating a certain 3G wireless patent held by Samsung was also dismissed. However, Samsung is expected to appeal to a higher court in Karlsruhe, Germany, against the dismissal.

Interestingly, very recently the same court in Karlsruhe, Germany, ruled in favor of Apple in the patent infringement case lodged by Motorola Mobility Holdings Inc. ( (MMI). The patent in question was related to 3G wireless networking standards that threatened to disrupt sales of Apple’s iconic iPhones and iPads in the country.

Apple has been pretty aggressive in protecting its intellectual property and has been using court rooms to counter competition in various countries. Notwithstanding a few failures, the company has received success in many of the patent litigation cases that it has filed against Samsung and other fellow competitors such as HTC and Motorola Mobility.

We believe that Apple’s legal tussles will continue as competition heats up in the smartphone and tablet space. This will increase legal expenses and will hurt Apple’s operating profit going forward. Additionally, the impending lawsuits in different countries will remain an overhang on the stock going forward.

Despite these factors, we believe that Apple remains the biggest growth story based on its superior product pipeline, popular apps, the recently launched iCloud and iPhone 4S, and the upcoming update of iPad and Apple TV, and loyal customer base.  With a solid balance sheet and robust revenues, we expect Apple to outperform its peers in the long run. Moreover, we also expect Apple to succeed in developing countries due to the growing affluence of the middle class in key markets.

We maintain our Neutral recommendation over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.

BP, Plaintiffs Settle on $7.8 Billion

BP Plc ( (BP - Analyst Report) and Plaintiffs’ Steering Committee (PSC) have reached an agreement of $7.8 billion, over the reimbursements to be made for the 2010 Gulf of Mexico oil spill.

The judge had earlier postponed the trial by a week and rescheduled it for March 5 to give BP and PSC more time to discuss and settle the matter. PSC embodies a group synchronizing the efforts of around 90 law firms on behalf of a condominium of owners, fishermen, hoteliers, restaurateurs and others damaged by the April 20, 2010 explosion of the Deepwater Horizon drilling rig and the subsequent oil spill. A settlement between BP and PSC reduces the complexity of the litigation and signifies a major step toward achieving a global settlement.

The oil spill had catastrophic effects killing eleven people and pouring 4.9 million barrels from the mile-deep Macondo oil well. This is by far the worst offshore U.S. oil spill.

The breach of Clean Water Act along with other laws led the U.S. government to take legal action against the main defendants in the trial––BP, Transocean Ltd ( (RIG - Analyst Report) and Halliburton Company ( (HAL - Analyst Report). Several other companies are also involved in the trial.

Per BP, the estimated settlement of $7.8 billion with PSC covers a significant extent of legitimate economic loss and medical claims arising from the Deepwater Horizon accident and oil spill. The settlement includes an amount of $2.3 billion set aside to especially help cover claims related to the Gulf seafood industry. The terms of the settlement are still required to be submitted to the court for approval.

BP expects to compensate the losses from Gulf Coast Claims Facility— a trust fund which was initially created with an amount $20 billion to pay for such claims. Currently, the fund is left with $9.5 billion. BP had earlier paid $6.1 billion from the fund to reimburse around 220,000 claimants.

Other than these, BP had also shelled out over $22 billion to meet other obligations in the Gulf region and made payments in excess of $8.1 billion to individuals, businesses and government entities. Another $14 billion was spent for operational purposes. BP has also promised to pay $105 million for the enhancement of healthcare facilities among Gulf communities.

The claims would be categorized under two heads — economic loss claims and medical claims.  The claimants demanding medical benefits, including workers who facilitated the spill clean up procedure, would be entitled to care for 21 years.

A charge of $37.2 billion, which has already been recorded in BP’s financial statement, inclusive of the $20 billion trust fund amount, is unlikely to be affected by this settlement.

The settlement will help BP to resolve issues with the federal and state governments and move beyond the Gulf oil spill. A settlement between BP and PSC reduces the complexity of the litigation and signifies a major step toward achieving a global settlement. The agreement does not settle the claims BP faces against the US government and drilling partners.

BP holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral recommendation on the stock.

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