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Creative 'may fail in iPod patent case'

Apple can afford a fight, analysts say

Analysts have warned that Creative's legal bid to prevent the iPod being sold in the US may fall flat.

Creative launched lawsuits alleging patent abuse in the US courts and with a US trade agency on Monday. It wants Apple to be prevented from selling iPods until claims that Apple has infringed a Creative-owned user interface patent are settled.

The short-term impact has been to kick Creative shares up to around $10 (about £5.50) per share, while Apple's stock has lost a few dollars.

But CIMB-GK Securities analyst Jonathan Ng dismissed the move as unlikely to change Creative's long-term outlook.

"The lawsuit will be a long process, and even if Creative wins, any damages awarded will be a one-off gain. This does not change Creative's business fundamentals and the fact that there is nothing much to look forward to on the operations front," he told Reuters.

Other analysts point out that Apple can afford a fight, while Creative continues to lose cash on a quarterly basis. It revealed a $114.3m (£60.7m) loss in its most recent quarter.

"In the long term, it will distract and divert management attention and company resources when both are needed to turn around the ailing business," an analyst said.

This story first appeared on Macworld.co.uk.


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