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Qualcomm to get up to $4.7 billion in legal settlement from Apple

Qualcomm reported fiscal second-quarter financial results on Wednesday, and revealed clues about its recent legal settlement with Apple. (Justin Sullivan/Getty Images)
Qualcomm reported fiscal second-quarter financial results on Wednesday, and revealed clues about its recent legal settlement with Apple. (Justin Sullivan/Getty Images)

SAN DIEGO — Qualcomm said Wednesday it will receive $4.5 billion to $4.7 billion in catch-up payments from Apple as part of last month’s settlement of their long-running legal war.

The one-time payment covers roughly two years during which Apple and contract manufacturers that assemble iPhones withheld patent royalties from Qualcomm while both sides battled in court.

Qualcomm CEO Steve Mollenkopf called the end of the litigation “a win for both companies.”

“We are pleased with the result and pleased to have it behind us,” said Mollenkopf in a conference call with analysts. “At a high level, this settlement involves two long-term agreements with Apple, a patent license agreement and a multi-year chip supply agreement.”

Beyond the catch-up payment, other details about Qualcomm’s settlement with Apple remain murky. That, coupled with a slumping smartphone market, cast a shadow over the San Diego mobile technology developer’s fiscal second-quarter results.

While Qualcomm beat Wall Street analysts’ financial targets for the March quarter, headwinds from weakening smartphone sales, particularly in China, sent mixed signals to investors looking for better news.

San Diego-based Qualcomm reported sales of $5 billion and earnings of $700 million, or 55 cents per share, for the quarter under Generally Accepted Accounting Principles.

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For the same quarter last year, Qualcomm posted revenue of $5.2 billion and earnings of $400 million, or 22 cents per share.

As part of Qualcomm’s conference call, analysts hoped to glean more information about the amount Apple is paying in patent royalties to Qualcomm — specifically if Apple was paying more or less than the $7.50 per iPhone that it paid from 2013 to 2016 before the court fight.

The companies, however, are keeping terms of the deal confidential, and it was difficult to uncover the amount of patent fees that Apple is paying per iPhone based on Qualcomm’s financial guidance.

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