Qualcomm gains $30 billion in market value after Apple settlement
By Akanksha Rana (Reuters) - Qualcomm Inc added $30 billion to its market value after it resolved a legal battle with Apple Inc, a move that secures its leadership in 5G phone chips and could pave the way for a similar settlement with China's Huawei Technologies.
By Akanksha Rana
(Reuters) - Qualcomm Inc added $30 billion to its market value after it resolved a legal battle with Apple Inc, a move that secures its leadership in 5G phone chips and could pave the way for a similar settlement with China's Huawei Technologies.
The company's shares, which closed up 23 percent on Tuesday after the announcement, rose as much as 17 percent on Wednesday, hitting their highest in nearly two decades.
The deal with Apple, coming at the cusp of the rollout of high-speed 5G network, could help Qualcomm return to the preeminent position it held in the early 2010s when it dominated the transition to 4G mobile networks and expanded revenues dramatically.
Qualcomm's fortunes are also looking up since Intel Corp, which had been Apple's sole iPhone chip supplier for the past year, decided to exit the modem chip business following Qualcomm's settlement with Apple.
"In the US, around 5G it's Qualcomm's world and everyone else is just paying rent," said Dan Ives, an analyst with Wedbush Securities.
"This was a game changing settlement for Qualcomm and was also a smart move by Apple to clear this noise and focus on 5G smartphones for 2020."
Wall Street analysts scrambled to raise their recommendations and price targets on Qualcomm's stock following the settlement.
At least three brokerages raised their ratings and nine ratcheted up their price targets. Stifel made the most aggressive move by raising its target by $43 to $100 - well above the median price target of $75.85.
Of the 25 brokerages covering the stock, 14 rate it "buy" or higher and the rest have a "hold" rating, according to Refinitiv data.
Bond investors also joined in, with Qualcomm's 4.3 percent 2047 issuance becoming one of the most heavily traded bonds in the U.S. corporate space on Wednesday, according to capital markets publication IFR.
The company could make $2 billion annually by taking Intel's market share and regain the dominant position it enjoyed during the rollout of 4G, analysts said.
The settlement also helps Apple close the gap with rivals such as South Korea's Samsung Electronics Co and Huawei in delivering a 5G phone.
Both Apple and Huawei had been at odds with Qualcomm over patents and royalties over modems. While Qualcomm did not close the terms of the deal, analysts estimated that Apple withheld $5 billion, or about $2 per share, under its previous royalty payment agreement.
"We now expect an imminent settlement with Huawei which has also been withholding royalty payments, which we estimate will add another $0.50-$0.75 of EPS," Cowen and Company analysts said.
A settlement with Apple and Huawei will not only bring in more royalty payments and reduce legal costs, it will help Qualcomm to focus more in rolling out its 5G modems, several analysts said.
(Reporting by Akanksha Rana in Bengaluru; Editing by Bernard Orr and Sweta Singh)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.