Apple's (AAPL) problems are only worsening as Monday presses on.
In yet another move that whipsaws the action in the shares, frequent legal foe Qualcomm (QCOM) announced that it had won a preliminary injunction against Apple for patent infringement.
The court ban handed down by the Fuzhou Intermediate People's Court in China restricts the import and sale of recent iPhone models 6 through X in China, which adds further pain for stockholders given the increased reliance by the company on its cheaper, older models.
"We have found the legacy iPhones are doing better than expected due to the price reductions which makes the legacy iPhones more affordable in developing countries," Citi wrote in a company note on Monday morning that followed the Wall Street trend of price target trimming.
The news of the injunction has drastically changed the perceived progress of the two companies' relationship, especially as recent statements from Qualcomm executives had suggested fences could indeed be mended.
"We do talk as companies [Apple and Qualcomm]" Qualcomm CEO Steve Mollenkopf said in an interview with Jim Cramer on Mad Money less than two weeks ago. "We're really on the doorstep of finding a resolution."
Monday's announcement quickly broke with that optimistic forecast and added to anxiety over the chip dispute that will hamper sales of older phone models.
"Apple continues to benefit from our intellectual property while refusing to compensate us," Don Rosenberg, Qualcomm's general counsel, said in a statement that struck a much less amenable chord than Mollenkopf had on both CNBC and in previous earnings calls.
"Additional actions seeking similar relief for Apple's infringement of other Qualcomm patents are pending in China and other jurisdictions around the world," a release provided to Real Money adds.
Shares of Apple have fallen in Monday morning trading from an already depressed Friday close. Qualcomm shares, meanwhile, have risen in morning trading as its bargaining position has appeared to improve.
Apple Still on the Attack
To be sure, Apple did not take the news sitting down.
"Qualcomm's effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world," Apple said in a statement. "All iPhone models remain available for our customers in China. Qualcomm is asserting three patents they had never raised before, including one which has already been invalidated. We will pursue all our legal options through the courts."
The ban will not apply to the newest models of iPhones (e.g., XR and XS), as Qualcomm was dropped from use in the latest releases of iPhone products.
Further, since the company has severed ties rather unamicably with Qualcomm, it has begun to poach talent from the company for its 4G and 5G efforts.
Apple has published 10 job listings in November aimed at Qualcomm's hometown of San Diego, according to Appleinsider. A cursory LinkedIn search shows that this number has only been added to as December marches on.
Maybe more importantly, it is important to note that the patent injunction applies to China alone and will leave the company's American breadbasket untouched.
Bottom Line
While Apple may have some ammunition to fight back with, both in its royalty payment withholdings that Mollenkopf has noted the impact of and its workforce incursions, the increased animosity between the two tech leaders comes at a very inopportune time for Apple.
Given the significant concern over the sturdiness of the company's Chinese endeavors, a share decline over yet another issue in the company's second largest market should be expected.
