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Apple could have paid Qualcomm between
$5 and $6 billion to settle the two companies’ bitter legal battle, according
to a new estimate.
Apple could have paid Qualcomm between
$5 and $6 billion to settle the two companies’ bitter legal battle, according
to a new estimate.
Apple probably paid Qualcomm between $5 billion and $6
billion to settle the litigation between the two companies, UBS analyst Timothy
Arcuri estimated in a note distributed on Thursday.
Apple probably also agreed to pay between $8 and $9 in patent
royalties per iPhone, estimated UBS, based on Qualcomm’s guidance that it
expects earnings per share to increase by $2 as a result of the settlement.
royalties per iPhone, estimated UBS, based on Qualcomm’s guidance that it
expects earnings per share to increase by $2 as a result of the settlement.
The UBS estimate suggests that Apple paid a high price to end a
bitter legal battle that spanned multiple continents and threatened Apple’s ability torelease a 5G iPhone and put pressure on Qualcomm’slicensing business modelthat contributes over half of the company’s
profit.
bitter legal battle that spanned multiple continents and threatened Apple’s ability torelease a 5G iPhone and put pressure on Qualcomm’slicensing business modelthat contributes over half of the company’s
profit.
Since the settlement, Qualcomm stock is up over 38%. Apple shares
are 2% higher.
are 2% higher.
The companies, which announced the settlement onTuesday as a trial in one of their many legal disputes got
underway, said that the settlement included a one-time payment from Apple to Qualcomm as well as a chipset supply
agreement that suggested that future iPhones would use Qualcomm modem chips.
underway, said that the settlement included a one-time payment from Apple to Qualcomm as well as a chipset supply
agreement that suggested that future iPhones would use Qualcomm modem chips.
Arcuri wrote that the one-time payment was likely for royalty
payments that Apple had stopped paying when the two companies were embroiled in
litigation, and that is how it was calculated.
payments that Apple had stopped paying when the two companies were embroiled in
litigation, and that is how it was calculated.
The settlement is “a solid outcome for Qualcomm and certainly
better than the [roughly] $5 [royalty payment] assumption we had been making,”
Arcuri wrote.
better than the [roughly] $5 [royalty payment] assumption we had been making,”
Arcuri wrote.
If Apple does pay between $8 and $9 in royalties per iPhone it
would be a significant increase over the $7.50 in royalties that it previously
paid Qualcomm per phone, according to Apple COO Jeff Williams’ testimony in an
FTC trial.
would be a significant increase over the $7.50 in royalties that it previously
paid Qualcomm per phone, according to Apple COO Jeff Williams’ testimony in an
FTC trial.
Apple and Qualcomm didn’t reply to a request for comment. When CNBC asked Qualcomm CEO SteveMollenkopf how much Apple pays it per phone on Wednesday as
well as the size of the one-time payment, he declined to answer.
well as the size of the one-time payment, he declined to answer.
“Well, a deal like this, there’s a lot of value back and forth,
and it’s just best to keep it confidential,” he said.
and it’s just best to keep it confidential,” he said.