Qualcomm, Inc. (NASDAQ: QCOM) is having an incredibly strong start to the trading session this morning, and for good reason. The company settled a long-standing dispute with Apple Inc. (NASDAQ: AAPL).
As you could imagine, the news excited investors, pushing the stock on a run for the top. Today, we’ll talk about:
- The settled litigation;
- what we’re seeing from QCOM stock as a result; and
- what we’ll be watching for ahead.
QCOM And AAPL Settle Litigation
For some time, the case between Apple and Qualcomm has had investors on the edges of their seats. The dispute surrounded royalty payments for the chipmaker’s smartphone equipment.
Late yesterday, it was announced that all litigation between QCOM and AAPL has come to an end. The settlement includes a payment from Apple to Qualcomm, but the parties have not disclosed the amount of that payment.
However, the benefit to QCOM goes far further than a settlement payment. The companies have also reached a six-year license agreement that became effective on April 1, 2019. This includes a two-year option to extend. The companies have also entered into a multiyear chipset supply agreement.
This is overwhelmingly important as it means that AAPL is going back to using QCOM as its supplier for modem chips. The company switched to Intel when the dispute with QCOM started.
The dispute that led to this settlement began back in January of 2017. It started with Apple accusing Qualcomm of using its dominant position as a supplier of modems to charge unreasonably high fees. The dispute continued to escalate to a lawsuit and import bans spanning multiple countries and jurisdictions.
Nonetheless, with the settlement in hand, the dispute is behind the companies. Now, AAPL and QCOM seem to be starting a meaningful relationship that will benefit both sides.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes ot Qualcomm, the news proved to be positive.
After all, the company’s settlement will likely drive a substantial increase in revenue as it will be supplying Apple with core aspects of its products. So, it’s not a shocker to see that excited investors are pushing the stock up in the market today.
As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:08), QCOM is trading at $78.92 per share after a gain of $8.47 per share or 12.03% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on QCOM. In particular, we’re interested in following the growth in revenue as chip shimpments start to go toward AAPL. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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