Chipmaker Qualcomm Inc. (NASDAQ: QCOM) won a landmark legal battle against Apple Inc. (NASDAQ: AAPL) this week, ending more than two years of litigation. Apple previously claimed that Qualcomm had unfairly overcharged for patents and technology, with some estimates placing the damages at over $27 billion. Qualcomm brought its own counterclaims to court, arguing that it was owed over $7 billion in unpaid royalties.
Qualcomm won an early round of litigation last month, with a Federal Jury deciding that Apple owed millions in damages. Apple, seeing that Qualcomm had the advantage in the legal case, decided to cease all litigation this week.
This ended one of the longest and most bitter technology battles of this era. Seen as a win as the stock in the company has soared.
What It Means for Both Companies Moving Forward
Rather than the fallout that many analysts predicted, both Qualcomm and Apple entered a new 6-year licensing agreement as part of the settlement. This will allow Apple to continue using Qualcomm’s technologies in its smartphones and other devices. Apple also paid an undisclosed sum to settle all open cases.
This outcome protects they vast patent licensing business. It also ensures that iPhones will receive cutting edge technology for years to come.
Apple stock has been largely unaffected this week, growing by 2.10%. For Qualcomm, the legal win has led to a huge market rally.
Is It Still the Right Time to Investin Qualcomm?
Many investors will be weary of jumping into this stock during this unexpected rally. Stock price has increased 41.47% over the last five days, and it’s unclear where the top end of this growth is.
However, there is still a very good reason to become a new investor, and that’s the dividend. Despite prices soaring, the dividend yield is still tracking at 3.14%. This is well above the market average and could be an excellent income opportunity.
Qualcomm remains a competitive microprocessor company and its products are used in smartphones and other devices globally. In its last full fiscal year, the company increased revenue by 1.98%, with a high profit margin of 57.11%.
Continued business growth is likely, making stock a compelling pick for investors today.
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