8 ms·
Notes: - Apple pays Qualcomm a one time payment, no word on the size - Qualcomm is up almost 18% while apple is flat which tells you who this affected more -
by chollida1 8y ago
Notes:
- Apple pays Qualcomm a one time payment, no word on the size
- Qualcomm is up almost 18% while apple is flat which tells you who this affected more
- ends all ongoing litigation
- 6 year license and global patent license agreement that can be extended
NOTE global license here is important as there was talk of just a US based agreement before
- new chipset supply agreement so don't look for Apple designed chipsets just yet
- Qualcomm might be finally done with litigation. China fined it $975M and Korea hit it with an $865M fine. Though to be fair, both countries are hardly neutral in this and its very reasonable to see these fines as a form of tariffs to help their own domestic companies
- wasn't a court ordered agreement which means both sides came together to make this and it wasn't forced on them by the courts.
- Qualcomm reported incremental EPS of $2 on its website, that's a fair bit so this is probably a win for Qualcomm in the short term, note this doesn't mean its bad for apple.
- bring on the 5G iPhones now, perhaps this makes Samsung the biggest loser out of this as apple is now ready for the nextgen cell service and Qualcomm is no longer negotiation from a position of weakness
- QCOM's licensing model lives on, good for them, makes them a big takeout target now, could see $100 QCOM in that case, its at $70 now and was $57 at the start of the day.
- GameOfTrolls 8y ago>QCOM's licensing model lives on, good for them No. Fuck that patent troll.
- oflannabhra 8y agoI'm guessing the one time payment might be of large enough size that analysts could figure it out based on quarterly statements, but I'm curious what the patent royalty agreement looks like. For Apple, I'm sure they'll still a) work on designing their own modems and b) source modems from Intel.
- danaris 8y ago> and b) source modems from Intel. Well, they can't do that anymore, given Intel's announcement that they won't be making them.
- duxup 8y agoWould they pay it / qualcomm account for it in a single quarter?
- Despegar 8y agoThe one time payment is likely just what they've been withholding for the past few years during litigation plus interest.
- Twisell 8y agoOr a fraction of that. Depend on the secret deal. Could as well be a symbolic 1$ if Qualcomm lawyers determined that it was a lost case and that settling it fast could prevent any additional harm in related antitrust cases.
- carnagii 8y ago> b) source modems from Intel. This settlement does not say good things about Intel's progress on 5G.
- oflannabhra 8y agoYep. I'd guess that they continue to source LTE modems from them, however.
- Alex3917 8y agoAll of their LTE modems, or just some of them like previous years?
- oflannabhra 8y agoMy bet would be they diversify their sourcing, if they can. In the FTC case Apple stated that they wanted to buy 4G modems from Qualcomm, but Qualcomm refused unless they were exclusive. But who knows what the terms of the deal are.
- wyldfire 8y agoUntil they have their own design, Apple would be wise to continue dual-sourcing the modems. Apple is heavily subsidizing Intel's R&D until they can bootstrap their own. Apple can make their premium offering Qualcomm's 5G and have the tier(s) below that be Intel's LTE.
- Alex3917 8y ago> Qualcomm is up almost 18% while apple is flat which tells you who this affected more Apple is over 10x bigger and had a better BATNA. Apple probably got most of what they wanted, even if Qualcomm's stock price is up more.
- chollida1 8y ago> Apple is over 10x bigger and had a better BATNA. Apple probably got most of what they wanted, even if Qualcomm's stock price is up more. I Fully agree with you. however I stand by my statement that this affected QCOM more than AAPL.
- dewitt 8y agoMaybe the parent's point is that AAPL could buy QCOM outright three times over with cash on hand alone, so nothing could possibly move Apple's needle much anymore, except sales or lack thereof.
- eridius 8y agoMy impression is that the lawsuit was depressing QCOM but not affecting AAPL, and so the resolution of the lawsuit of course buoys QCOM without affecting AAPL.
- zepto 8y agoYes, because Apple was expected to prevail, and QCOM by folding, curtailed risk that was built into its price.
- wyldfire 8y agoWas that really the case that they were expected to prevail? They agreed to the terms and decided to renegotiate afterwards, instead of after the expiration of the agreement. If they thought the terms were unjust then they should have designed QCOM parts out beforehand or brought a suit then. QCOM offered a royalty cap in order to avoid the problems they described ("we add NAND and they charge a bigger royalty", "cost of the couch based on the price of the house", etc). It strikes me as brinksmanship in order to get a better deal for the next agreement: 5G chips. No surprise that it's part of the settlement. But yes, without a doubt, QCOM did mitigate risk by agreeing to the settlement. They only narrowly avoided an LBO.
- foobarbazetc 8y agoEh... markets overreact. Why would Apple put themselves in the same position again in 6-8 years? Most likely the deal includes patent licenses so Apple can stop using QCOM. No way Apple agrees otherwise.
- devy 8y ago> - bring on the 5G iPhones now, perhaps this makes Samsung the biggest loser out of this as apple is now ready for the nextgen cell service and Qualcomm is no longer negotiation from a position of weakness Apple was cornered in the 5G basedband chipset procurement before the settlement as the only viable solution was to ask Huawei (Huawei actually welcomed this :-) And now Apple's future iPhone is in a much better position in connectivity given Qualcomm becomes the chosen vendor again (before that, Samsung / Qualcomm weren't options).
- baybal2 8y ago> Apple was cornered in the 5G basedband chipset procurement before the settlement as the only viable solution was to ask Huawei (Huawei actually welcomed this :-) To the extend of my knowledge of those talks, Huawei proposed "you buy the whole Kirin 990 SoC, no separate modem for you" and Apple walked out right away
- PedroBatista 8y agoI find it hard to believe they proposed such thing if they were serious about selling anything to Apple. They already knew the answer.
- baybal2 8y agoGiven the mindset of senior managers in companies like HW, I think it would be not something unexpected. I once thought of tech companies being ran buy bankers and lawyers as an American thing, but Chinese MNCs have since outdone US on that few times over
- tooltalk 8y ago> - QCOM's licensing model lives on The FTC's antitrust case is still on and Judge Koh's pre-trial decision on component-level licensing must be reversed to preserve QC's licensing model.
- wyldfire 8y ago> Judge Koh's pre-trial decision on component-level licensing That was a weird ruling IMO, this has been the status quo since prior to Apple's entry into the cell phone market. (Note that Apple's not even a licensee -- it's Foxconn's "device" that we're talking about here).
- tooltalk 8y agoyes, true. QCOM's is completely legit and consistent with ETSI FRAND. Apple's hometown court Judge Koh ruled that under ATIS/TIA however it's a breach of FRAND obligation.
- mpweiher 8y ago> Qualcomm is up almost 18% while apple is flat which tells you who this affected more Not really. It primarily tells you what the market had expected and priced in, and how this outcome is viewed relative to those expectations. For example, the market could have expected QC to get hammered, so an agreement that now only has a small effect would have a positive impact on stock price. And of course, as others have pointed out, the >10x difference in market cap matters for relative impact on the stock price. Even if the absolute impact were the same, you’d expect AAPL to move 10x less.
- simonh 8y agoSo I’m other words, it mattered to Qualcomm more than to Apple?
- opportune 8y agoSo, you're saying it did affect apple more than qualcomm then?
- mpweiher 8y agoNope. There were two parts: (1) Stock prices reflect market expectations as much (or more) than current realities. This includes the stock price prior to the current move. So a 16% move could indicate that the market now expects a positive effect on QC where previously it had expected none. However, it could equally well reflect that the market previously expected a negative outcome, and the judgement will actually mean QC will not be affected in this negative way. We just don't know. (2) It also depends on what you mean by "more". Let's say that there's a positive $2 billion effect. Is this effect greater on Apple or QC? If you view it in absolute terms, it's exactly the same effect. If you view it in relative terms, it is going to affect QC more than Apple, since QC is the smaller company. However, if you take the latter definition, the OP's comment is a bit vacuous/redundant/tautological as Apple is always the bigger company. So the only meaningful statement we can make would be about the absolute effect, and this, once again, we cannot infer from the stock movement.
- zeroimpl 8y agoIt’s possible the deal didn’t affect Apple but losing all those lawsuits did.
- benatkin 8y agoI was confused when I read the headline, but it seems like a good characterization of a 6 year agreement. It's not permanent, but it's long enough that it seems like a real truce. I'm surprised this didn't help Apple stock more. Guess they had a solid plan B, but still, it seems much easier to have this in place for such a long time!
- stock_toaster 8y ago> - ends all ongoing litigation I also read somewhere that it also include litigation against apple's suppliers, who apple told to stop paying Qualcomm a while back. That seems pretty significant, if true.
- GeekyBear 8y agoQualcomm's biggest threat to their current level of profitability is that they could be forced to stop seeking a percentage of the retail price of a cellular device directly from the device makers. Qualcomm's strategy has been to refuse to license their standards essential patents to their cellular modem competitors, and instead go after device makers. Judge Koh in the Qualcomm vs. FTC antitrust trial has already issued a ruling that Qualcomm may not continue to refuse to license it's standards essential patents to it's competitors. https://jolt.law.harvard.edu/digest/ftc-v-qualcomm-standard-essential-patent-holders-must-license-to-competitors https://jolt.law.harvard.edu/digest/ftc-v-qualcomm-standard-... Apple sought a ruling in this case that once Qualcomm's rival modem makers received a license to Qualcomm's standard essential patents on FRAND terms, Qualcomm's patents would be exhausted, and they could not continue to seek additional fees (a percentage of the retail price of the entire device) from the device maker. This has a huge effect on profitability because the courts have already shut down Google's attempt to price gouge Microsoft for a percentage of the retail price of Microsoft's XBox over standards essential FRAND encumbered patents back when Google owned Motorola. >In a closely watched case, a federal judge has determined that Motorola is entitled to millions -- not billions -- of dollars in compensation for Microsoft's use of certain standard-essential patents. U.S. District Judge James Robart ruled Thursday that Microsoft should pay Google's Motorola Mobility unit $1.8 million a year in royalties for use of wireless and video coding patents it used in the Xbox and its smartphones. Motorola had demanded Microsoft pay royalties of $4 billion for use of patents that are part of the H.264 video and 802.11 wireless standards, which is baked into Windows and the Xbox video game console. Microsoft was willing to pay a royalty, but not at the 2.25 percent of the product price that Motorola has sought. https://www.cnet.com/news/court-sides-with-microsoft-over-motorola-patents-used-in-xbox/ https://www.cnet.com/news/court-sides-with-microsoft-over-mo... Given the percentage of Qualcomm's bottom line that comes in as licensing fees, getting paid a FRAND appropriate licensing fee set by the courts instead of a percentage of the retail price of the whole device would have been absolutely disastrous for Qualcomm's bottom line.
- mises 8y agoI'm not sure I understand the rationale behind Koh's ruling. Why ought a firm be forced to license IP? The Constitution patent clause grants Congress the right to "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Would this ruling not, under that clause, be unconstitutional? Qualcomm is making use of its exclusive right. I agree they've got some rather bad business practices, and the FTC could try to get a ruling that they had to only charge for the chip, but I don't understand the way that ruling is worded. I feel like the media model, the whole "you only buy a license" mess, is leaking into physical stuff. You now must buy not only a chip but a license? Why would a company choose that business model? To summarize, I feel that it's not the best business practice, but don't understand why Koh ruled as she did and how she could justify the ruling's constitutionality.
- dba7dba 8y ago> - bring on the 5G iPhones now, perhaps this makes Samsung the biggest loser out of this as apple is now ready for the nextgen cell service and Qualcomm is no longer negotiation from a position of weakness Funny you mention Samsung, because just a few days ago I read a blogger with contacts in S. Korea claimed that Apple asked Samsung to supply 5G for iPhones. But Samsung answered no as they are unable to meet the volume requirement as they are already busy with existing orders. Completely unsubstantiated and could just be some random rumor, but I find it interesting this news comes out days after that rumor.
- dba7dba 8y agoLol. And that news that Intel is exiting 5G. No wonder apple gave in to Qualcomm.
- bradknowles 8y agoAnd the same day, Intel announces they’re getting out of the 5G modem business? Hmm.
- deleted 8y ago[deleted]
- baybal2 8y agoRepost from another topic: It is not like Qualcomm settles with Apple to get into Apple's cellphones, it is a concession made to make them drop Intel and still pay them royalties after Apple finishes development of its own modem. Apple been poaching Qualcomm's radio engineers for years ...for work in their Chinese RnD centre (no non-compete enforcement there)