Qualcomm to pay Broadcom $891M in massive settlement

Qualcomm posted a $289 million loss for its fiscal second quarter, primarily related to its landmark multimillion-dollar settlement with rival Broadcom, which effectively ends all patent litigation between the two chipmakers.

Qualcomm postponed its earnings announcement last week pending negotiations with Broadcom. The agreement announced between the two companies--and released concurrently with Qualcomm's earnings--calls for Qualcomm to pay Broadcom $891 million in cash over the next four years. The deal resulted in a $748 million charge for Qualcomm's quarter.

Qualcomm's overall loss for the second quarter is a dramatic change from the net income of $766 million it recorded in the year-ago quarter. Revenue also fell 5.8 percent from the year-ago quarter. However, despite the drop off in chipset sales, the company raised its annual revenue forecast to between $9.85 billion and $10.25 billion, up from a range of $9.3 billion to $9.8 billion that it had predicted in January.

"Our second quarter revenues were at the high end of prior guidance, and I am pleased with the strong operating performance of our business," said Qualcomm CEO Paul Jacobs in a release. "The recent settlement with Broadcom will resolve all pending litigation between the parties, and while this settlement adversely impacted our second-quarter results, eliminating uncertainty, employee distraction and cost related to protracted litigation is a positive for our stockholders, customers, partners and the wireless industry."

Qualcomm's stock rose slightly on the news to around $41 per share.

Broadcom and Qualcomm, two California-based chip vendors, have been locked for years in drawn-out, saga-like patent struggles in court and in disputes before the U.S. International Trade Commission. The companies have locked horns over digital video patents, EV-DO technologies and other disputes. 

For more:
- see this article [1]
- see this article [2] (sub. req.)
- see this release [3]

Related Articles:
Qualcomm postpones earnings pending possible Broadcom settlement [4]
Nokia and Qualcomm: the new frenemies [5]
Qualcomm [6] challenges Intel over netbook dominance
[7]Qualcomm posts lower profit, cuts 2009 outlook [8]
Broadcom wins round over Qualcomm in [7]patent litigation [9]
Broadcom gets the latest victory in patent fight [10] with Qualcomm
Qualcomm [11], Broadcom each gain in latest court rulings
[7]