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Apple (AAPL) Wins Against Rival Xiaomi in EU Trademark Case

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Per Reuters, Apple Inc. (AAPL - Free Report) has won the long-pending case against Chinese manufacturer, Xiaomi over the registration of “Mi Pad” as an European Union (EU) trademark.

The tech giant had filed a complaint with the European Union Intellectual Property Office (EUIPO) in 2016 over Xiaomi’s application of Mi Pad as an European trademark in 2014. Apple stated that the name is similar to that of its iPad trademark.

Following EUIPO’s support to Apple, Xiaomi appealed to the General Court, the second highest court of the European Union. The plea was rejected thisTuesday saying that the similarity of the signs might lead to confusion among users.

Per the ruling, “additional letter ‘m’ at the beginning of "Mi Pad", is not sufficient to offset the high degree of visual and phonetic similarity between the two signs."

However, Xiaomi can still appeal at EU's highest court, European Court of Justice, against the ruling.

Xiaomi - A Concern

Apple is facing significant competition from Xiaomi across segments like smartphones, tablets, wearables as well as laptops.

To gain market share against Xiaomi and other competitors like Samsung, Huawei, Oppo and Vivo, Apple offered significant discounts on iPhone 7 and iPhone 7 Plus in rapidly growing markets like India and China.

We note that Apple has been taking a lot of initiatives to boost its presence in emerging markets like India. In the last reported quarter, Apple sales in India doubled year over year. iPhone shipments increased in double digits, similar to other markets like mainland China, the Middle East, Central and Eastern Europe, Mexico.

Notably, shares of Apple have gained 46.5% year to date, slightly outperforming the industry’s 45.6% rally.

According to the latest International Data Corporation (IDC) report released in November, Xiaomi and Samsung are the two leading smartphone brands in India with 23.5% market share each in the third quarter.

Although Xiaomi is ranked fifth in the global smartphone market, it recorded maximum growth. While Xiaomi’s shipments nearly tripled on a year-over-year basis, it doubled sequentially doubled in third quarter. IDC pointed out that its strong growth in India market was a key catalyst.

We note that a resurgent iPad business backed the impressive results of Apple in the last quarter. Apple sold 10.3 million iPads in the quarter, up 11% year over year.

However, competition has intensified with Amazon, HTC, Microsoft, Hewlett Packard and others flooding the tablet market.

Apple is heavily dependent on iPhone and iPad sales and heightened competition will continue to hurt its top line and profitability.

Zacks Rank and Stocks to Consider

Apple carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Intel Corporation (INTC - Free Report) , Lam Research Corporation (LRCX - Free Report) and NVIDIA Corporation (NVDA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Intel, Lam Research and NVIDIA is projected to be 8.4%, 14.9% and 11.2%, respectively.

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