Wells Fargo analyst Maynard Um believes that Apple’s US$350 million acquisition of AuthenTec could relate to Apple’s strategy for the mobile payments market. Mr. Um told clients on Friday that he believes fingerprint sensor technology owned by authenTec could make its way to Apple’s iOS devices.
“Apple is likely most interested in its fingerprint authentication smart sensor technology, which we think it may want to use for iPhone mobile payment authentication,” Mr. Um said in a research note obtained by The Mac Observer. Apple’s purchase of the company, he said, “signals [the] potential for fingerprint sensors in upcoming Apple products—likely for secure payments on iPhone.”
He added,”We expect Apple to integrate the technology into its iPhone and iPad offerings and further differentiate its products and reiterate our Outperform rating.”
Mr. Um also believes that some of AuthenTec’s security-related technologies could allow Apple to make itself more competitive in the enterprise market. As others have speculated, the analyst pointed out that AuthenTec’s patent portfolio could help Apple beef up its offensive and defensive capabilities while it fights Google and its Android OEMS over what Apple believes is patent infringement.
Lastly, Mr. Um noted that if the merger doesn’t go through, the terms of the deal allow Apple to acquire nonexclusive licenses and other right to AuthenTec’s patents. Apple will also have 270 days to license those patents on a perpetual and nonexclusive basis for another $115 million. The firm will also do some engineering work for Apple for $7.5 million, with any resulting intellectual property belonging to Apple.
In addition to reiterating his “Outperform” rating on the stock, Mr. Um maintained his $640-$660 price target for AAPL.
Shares of AAPL rose to $585.16, up $10.28 (+1.79 percent), on moderate volume of 14.4 million shares trading hands.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.