Qualcomm (QCOM) has been the premier provider of chips for handsets for years. But its investors have had ongoing concerns about legal fighting with its customers, especially Nokia (NOK), and its rivals, especially Broadcom (BRCM). It made peace with Nokia months ago, but has been in court with Broadcom for years.
Recently, there has been hope that Qualcomm would settle issues with its competitor. The company even pushed back its earnings release date because a settlement was getting close. Now it seems the negotiations with Broadcom have been successful.
According to Reuters, "Wireless chip supplier Qualcomm Inc. agreed to pay smaller rival Broadcom Corp. $891 million over four years to settle long-standing and increasingly bitter legal battles over technology patents."
Despite the cost, the news is good for Qualcomm. If it had lost patent rulings in its legal fight against Broadcom, the costs could have been very high. Qualcomm was also spending tens of millions of dollars on legal fees and devoting management time to the battle.
For Qualcomm investors, a big set of risks to the company's future have gone away.
Douglas A. McIntyre is an editor at 24/7 Wall St.