Qualcomm keeps quiet about Apple deal value following lawsuit settlement

AppleInsider

Qualcomm has no intention of revealing how much it will benefit from a payment and licensing agreement reached with Apple at the start of a potentially expensive patent licensing trial, CEO Steve Mollenkopf advises, insisting the legal dispute is behind the two companies as they work on new products.

Qualcomm CEO Steve Mollenkopf

At the start of the high-stakes patent licensing trial on Tuesday, a press release announced ongoing litigation between Qualcomm and Apple would cease with immediate effect. At the same time, the two companies revealed they had reached a six-year licensing agreement enabling Qualcomm to rejoin the iPhone supply chain, and that Apple would pay Qualcomm an undisclosed sum.

Speaking to CNBC on Wednesday, Mollenkopf confirmed the value of the payment agreed with by Apple will remain unannounced. It is likely the amount is sizable, as shortly after the settlement announcement, Qualcomm informed investors it expected incremental earnings per share of $2, increased as a reflection of a ramping up of shipments to Apple, and providing 5G modems to the iPhone producer.

Watch CNBC's full interview with Qualcomm CEO Steve Mollenkopf from CNBC.

In the time since the settlement, Qualcomm's shares were up more than 15 percent in early-morning trading, after a 23-percent rally on Tuesday just after the deal's announcement.

Mollenkopf expressed pleasure that the ordeal was over and the two firms would work together again. "The reality is two great product companies, it's a natural position for them to work together and want to work together," he insisted.

"The energy of the companies right now is lets figure out how to ramp up as quickly as possible. That's where the focus is, that's what we are excited about" Mollenkopf continued.

The change of heart for the two companies opens up Qualcomm to Apple's modem supply chain, a lucrative source of revenue especially considering the future need for 5G modems, and Intel's announcement it was dropping out of the 5G smartphone modem market. Intel citied "no clear path to profitability and positive returns," with the timing of the settlement likely to have been due to Apple's sudden deal with Qualcomm.

"There's a lot of opportunity for us to go after that and we hope to have the ability to do even more," advised the Qualcomm CEO.

Apple is currently anticipated to start using Qualcomm's 5G modems in iPhones by 2020. Qualcomm's first-generation 5G modem is expected to be used in other smartphones later in 2019.

wood1208

Must be less than Qualcomm asked for. And probably accepted no double dipping and not charge on the whole value of iPhone. And about Intel's 5G modem development like the pace of it's 10nm chip development schedule, can't compete in fast moving mobile market.

edited April 2019

slprescott

Funny if the deal were: "$1.  But Qualcomm gets to make a public statement about Apple making a payment."

lkrupp

Well, there’s a lot to digest. Apple was behind the eight ball because it became clear Intel would not be able to produce a 5G modem and Apple’s in-house plans were years away. Qualcomm was behind the eight ball because they were losing revenue from one of their biggest, if not the biggest, customers. Money talks and bullshit walks. At least we won’t have listen to the whining and carping about from trolls about how much better the Qualcomm modem is than the Intel one.

yuck9

Apple had no choice. The Intel modems are junk. Look at the XS line. Reception problems. Intel cant make a 5G radio and If Apple were to wait then they will be so far behind the 8 ball they would never catch up.
Apple gets the modems and Qualcomm gets the $$$ both win. 

leavingthebigg

Why are people assuming Apple will use Qualcomm’s 5G modem chip instead of its own 5G modem chip in 2020?

Any one-time payment to Qualcomm could be the $7B Apple and its suppliers didn’t pay for Qualcomm chips vs a down payment for future chips. 

A worldwide licensing agreement could be for Qualcomm’s 5G FRAND IP that a US Federal judge said Qualcomm was legally required to do without extra requirements.

A six-year licensing agreement could cover Qualcomm’s 4G/LTE modem chips for older iPhones, iPads, etc. that will remain in production for several more years.

And yes, the ITC could have informed Apple iPhones will have to be blocked from import into the US.

jungmark

I'm sure it was less than Q wanted and more than Apple wanted. However I think the long term agreement to get the 5G modems played a big part in settlement. 

randominternetperson

Qualcomm has 1.2 billion shares, so "expected incremental earnings per share of $2" is "just" $2.4 billion.  And that's a combination of the cash settlement and additional sales to Apple?  

strangedays

yuck9 said:

Apple had no choice. The Intel modems are junk. Look at the XS line. Reception problems. Intel cant make a 5G radio and If Apple were to wait then they will be so far behind the 8 ball they would never catch up.
Apple gets the modems and Qualcomm gets the $$$ both win. 

They aren’t junk. I have had Intel modems in my iphones and never noticed anything. Supposedly the max speeds were lower but never cared.

elijahg

StrangeDays said:

yuck9 said:

Apple had no choice. The Intel modems are junk. Look at the XS line. Reception problems. Intel cant make a 5G radio and If Apple were to wait then they will be so far behind the 8 ball they would never catch up.
Apple gets the modems and Qualcomm gets the $$$ both win. 

They aren’t junk. I have had Intel modems in my iphones and never noticed anything. Supposedly the max speeds were lower but never cared.

The theoretical up and downlink speeds are way way higher than they need to be anyway, so even if Intel modems were slower, it wouldn't make a tangible difference in actual use vs speed tests.

mplsp

StrangeDays said:

yuck9 said:

Apple had no choice. The Intel modems are junk. Look at the XS line. Reception problems. Intel cant make a 5G radio and If Apple were to wait then they will be so far behind the 8 ball they would never catch up.
Apple gets the modems and Qualcomm gets the $$$ both win. 

They aren’t junk. I have had Intel modems in my iphones and never noticed anything. Supposedly the max speeds were lower but never cared.

Same here. So far as one can objectively measure modem speeds, most tests I saw concluded that the QC modems were faster. The problem with such measurements is the fact that differences caused real-world variations in signal strength and quality generally dwarfed the differences between the different modems, so the average user would likely not be able to tell the difference and the only real benefit was for some people to obsess over the numbers. 

mplsp

lkrupp said:

Well, there’s a lot to digest. Apple was behind the eight ball because it became clear Intel would not be able to produce a 5G modem and Apple’s in-house plans were years away. Qualcomm was behind the eight ball because they were losing revenue from one of their biggest, if not the biggest, customers. Money talks and bullshit walks. At least we won’t have listen to the whining and carping about from trolls about how much better the Qualcomm modem is than the Intel one.

Yes - with all the news over the last few days, there is no shortage of hypotheses as to what really happened, and we'll likely never know for sure.

ericthehalfbee

Of course Qualcomm will stay quiet. Remember they still have an FTC court decision coming up soon. They would very likely want to "look good" to the FTC for settling with Apple and not rock the boat with any comments that could be taken the wrong way.

Speaking of the FTC, since Intel is now out for 5G modems, does this make their case against Qualcomm even stronger (since a major potential modem supplier is no more)?

gatorguy

slprescott said:

Funny if the deal were: "$1.  But Qualcomm gets to make a public statement about Apple making a payment."

With QC announcing that with the settlement it should contribute about $2 earnings per share in this quarter I think it's a whole lot more than $1

edited April 2019

tht

The Kremlinology on this is getting overkill.

It could be just as simple as a settlement clause. Why would either company want their terms known? I don’t think either company wants Samsung, Huawei, LG, etc, to know the terms of the deal at all.

bluefire1

This news made my day! In my opinion, QUALCOMM modems have been vastly superior to any other modems used in iPhones.
My Max has an Intel modem and the difference in quality is all too obvious. I’m eagerly awaiting the 2020 iPhone with a QCOM modem!

gatorguy

ericthehalfbee said:

Of course Qualcomm will stay quiet. Remember they still have an FTC court decision coming up soon. They would very likely want to "look good" to the FTC for settling with Apple and not rock the boat with any comments that could be taken the wrong way.

Speaking of the FTC, since Intel is now out for 5G modems, does this make their case against Qualcomm even stronger (since a major potential modem supplier is no more)?

FossPatents is guessing that the FTC's case might be quickly settled out-of-court after Apple and QC agreed to be friends again yesterday. 

"In the immediate aftermath of this settlement, the question is what this means for the FTC v. Qualcomm case that went to trial in January. Judge Lucy H. Koh of the United States District Court for the Northern District of California might rule anytime now. Or that case might get settled, too.

The Federal Trade Commission of the United States deserves respect. What's obvious (and therefore not a question of respect or a lack thereof) is that there's now less of a national interest in that antitrust case than before. However, I have consistently said that the case is about important issues, not just particular companies. It could be that the FTC, whose primary job is to prevent consumer harm, decides to carry on regardless. Or they might settle in the short term. We'll see what happens."

edited April 2019

carnegie

gatorguy said:

slprescott said:

Funny if the deal were: "$1.  But Qualcomm gets to make a public statement about Apple making a payment."

With QC announcing that with the settlement it should contribute about $2 earnings per share in this quarter I think it's a whole lot more than $1

Where did Qualcomm announce that?

If you’re referring to the estimate Qualcomm provided yesterday with its press release about the settlement, that wasn’t for this quarter and it wasn’t from the one-time payment. It was the incremental EPS Qualcomm expects to see as a result of the patent licensing and chipset supply agreements, and “as product shipments ramps” rather than right away.

carnegie

gatorguy said:

ericthehalfbee said:

Of course Qualcomm will stay quiet. Remember they still have an FTC court decision coming up soon. They would very likely want to "look good" to the FTC for settling with Apple and not rock the boat with any comments that could be taken the wrong way.

Speaking of the FTC, since Intel is now out for 5G modems, does this make their case against Qualcomm even stronger (since a major potential modem supplier is no more)?

FossPatents is guessing that the FTC's case might either be dropped entirely or quickly settled out-of-court after Apple and QC agreed to be friends again yesterday. 

It wouldn’t surprise me if it gets settled soon. I’ll be keeping an eye out for an announcement this afternoon. To be clear, I’m not betting on that - just think it’s a reasonable possibility now.

I doubt the case will be dropped outright. But if it is, that would suggest to me that Qualcomm agreed - in its settlement with Apple - to stop doing a lot of things it previously did.

gatorguy

carnegie said:

gatorguy said:

slprescott said:

Funny if the deal were: "$1.  But Qualcomm gets to make a public statement about Apple making a payment."

With QC announcing that with the settlement it should contribute about $2 earnings per share in this quarter I think it's a whole lot more than $1

Where did Qualcomm announce that?

If you’re referring to the estimate Qualcomm provided yesterday with its press release about the settlement, that wasn’t for this quarter and it wasn’t from the one-time payment. It was the incremental EPS Qualcomm expects to see as a result of the patent licensing and chipset supply agreements, and “as product shipments ramps” rather than right away.

Hey thanks Carnegie, I went back and re-read after your prompt.
"Qualcomm said (it) will add $2.00 of incremental earnings per share to its 2020 financial results"
https://www.bloomberg.com/news/articles/2019-04-17/qualcomm-rally-has-room-to-run-after-apple-pact-analysts-say

Thanks for pointing out I was in error in the timeline. 

edited April 2019

sflocal

bluefire1 said:

This news made my day! In my opinion, QUALCOMM modems have been vastly superior to any other modems used in iPhones.
My Max has an Intel modem and the difference in quality is all too obvious. I’m eagerly awaiting the 2020 iPhone with a QCOM modem!

In real-world usage, there is a negligible difference between QC's modem, and Intel's modem.  Sure, QC's modem has a much higher bandwidth speed, but since the networks are unable to reach those speeds, it's all placebo.

Try again.