Qualcomm and Huawei Sign a Patent Licensing Deal

Qualcomm announced this week in its third quarter earnings report that it has signed a deal with Chinese telecom business Huawei to settle a patent dispute. Shares were up roughly 14% in after-hours trading on Wednesday.

The company said the global licensing agreement grants Huawei back rights to some of the San Diego-based tech company’s patents effective Jan. 1, 2020.

Qualcomm is expecting roughly $1.8 billion from Huawei as part of the back-dated agreement.

“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” Qualcomm CEO Steve Mollenkopf stated.

For the third quarter, Qualcomm reported $4.89 billion in revenue and $845 million in profit.
The company reported a profit of $0.74 per share, beating analysts’ expectations. Looking at the current quarter, Qualcomm predicted earnings between $1.05 and $1.25 per share. This includes a 15 percent year-over-year drop in handset shipments it attributed to the coronavirus pandemic.

“We delivered earnings above the high end of our range, continued to execute in our product and licensing businesses and entered into a new long-term patent license agreement with Huawei, all of which position us well for the balance of 2020 and beyond,” Mollenkopf said.

“With the signing of the Huawei agreement we are now entering a period in which we have multiyear license agreements with every major handset OEM,” Mollenkopf added.

“I believe this significantly de-risks Qualcomm investors,” remarked Patrick Moorhead, analyst at Moor Insights.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.