Qualcomm Settles With Broadcom Over Patent Imbroglio

Wireless Networking Specialist Qualcomm has agreed to pay $891 million to rival Broadcom over the next four years in a bid to settle an ongoing dispute between the two companies.

The row involved a dispute over Qualcomm's illegal use of Broadcom patents. The current agreement will see both companies license each other's patent and refrain from suing each other into oblivion (ed: they might as well try to see whether they could merge).

The patent infringement claims that Broadcom put forward against Qualcomm - and could potentially have caused havoc in the mobile phone market - have been been dismissed altogether.

In a joint statement, the heads of both companies said that they believe that this resolution "was positive" for both Qualcomm and Broadcom, their customers, their partners and the overall industry.

Qualcomm also announced its second quarter fiscal 2009 results showing the company's revenues slowed down slightly down $60 million from $2.52 billion in Q1 to $2.46 billion.

The settlement with Broadcom also means that the company will register an operating loss of $10 million, accounting for a $748 million charge for the agreement.

Had Qualcomm and Broadcom not come to terms with each other, the launch of many next generation mobile phones might have been jeopardised given the fact that Broadcom was seeking support from a number of international institutions (like the European Commission) to block Qualcomm chips from being sold.

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Our Comments

Qualcomm seems to be the biggest winner overall. Its share price jumped by 3.4 percent in pre-market session. The agreement means that it has removed a major hurdle that threatened to wreak havoc to its roadmap. Broadcom initially didn't want to settle for cash but something happened along the way that changed the company's mind. The terms of the deal were not disclosed though.

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