LONDON, UK / ACCESSWIRE / May 30, 2017 / Active Wall St. blog coverage looks at the headline from BlackBerry Ltd (NASDAQ: BBRY) and Qualcomm Inc. (NASDAQ: QCOM). BlackBerry announced on May 26, 2017, that it has reached an agreement with Qualcomm, resolving all amounts payable, in reference to the interim arbitration decision announced on April 12, 2017. Post a joint stipulation by the parties, the arbitration panel has issued a final award, where Qualcomm will pay BlackBerry a total amount of $940 million including interest and attorney's fees, net of certain royalties due from BlackBerry for FY16 and Q1 FY17. Qualcomm is legible to pay the full amount of the final award by May 31, 2017. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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Qualcomm Arbitration
On April 12, 2017, BlackBerry announced a binding interim arbitration decision, offering the Company $814.87 million in royalty payments made to Qualcomm. On April 20, 2016, Blackberry and Qualcomm entered into an agreement to arbitrate a dispute concerning Qualcomm's agreement to cap certain royalties applied to payments made by BlackBerry under a license agreement midst the parties. The binding arbitration hearing was held in San Diego, California from February 27, 2017, to March 03, 2017, under Judicial Arbitration and Mediation Services rules.
This arbitration payment is to refund BlackBerry's overpayment of royalty fees to Qualcomm. The Company made advance royalty payments on Qualcomm's patents where Qualcomm argued it was nonrefundable but Blackberry won the battle because the Company did not manufacture the phones involving those prepaid royalty fees. Blackberry initially argued that there should be a cap on those royalty payments that did not get applied at the time. The refund from Qualcomm will boost BlackBerry's cash hoard which was $1.7 billion at the end of Q4 FY16. The Company no longer manufactures phones that used Qualcomm Technology and argued that it was due to refund after sales collapsed.
Qualcomm's Story
Qualcomm owns multiple patents which cover the fundamentals of modern mobile technology and receives a set payment on the selling price of handsets from phone makers. The semiconductor chip maker earns a majority of its profit from the license payments. In 2010, Ontario-based BlackBerry signed a non-refundable agreement with Qualcomm to cover royalty payments through 2015. The Company shipped far fewer phones than it expected, leading it to seek a refund on some payments. Initially, Qualcomm stated on April 12, 2017, that it disagreed with the outcome of arbitration proceeding with BlackBerry, but observed that the decision was binding, and hence, could not appeal against it.
Company Growth Prospects
BlackBerry is a mobile-native security software and Services (SaaS) Company which develops devices and processes for the enterprise community. Based in Waterloo, Ontario, BlackBerry was found in 1984 and currently operates across North America, Europe, Middle-East, Asia, Latin America, and Africa. Through the proceeds from this arbitration, BlackBerry can expand in the SaaS segment and significantly elevate its position.
On April 19, 2017, BlackBerry entered into a new initiative with Allied World Assurance (NYSE: AWH) for an undisclosed amount, under which, Allied World would provide its cyber policyholders with direct access to BlackBerry's cyber security expertise through an online self-assessment tool that identifies segments of weakness. This agreement enabled BlackBerry to expand its channel reach and help policyholders stay secure from rising cyber security threats.
Stock Performance
On Friday, May 26, 2017, the stock closed the trading session at $11.11, marginally falling 0.98% from its previous closing price of $11.22. A total volume of 10.41 million shares have exchanged hands, which was higher than the 3-month average volume of 8.10 million shares. BlackBerry's stock price soared 56.48% in the last three months, 48.73% in the past six months, and 54.95% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have skyrocketed 61.25%. The stock currently has a market cap of $5.99 billion.
On Friday, May 26, 2017, Qualcomm's stock closed the trading session at $57.52, slipping 1.59% from its previous closing price of $58.45. A total volume of 8.22 million shares have exchanged hands. The Company's stock price advanced 8.10% in the last month, 1.39% in the past three months, and 3.19% in the previous twelve months. The stock is trading at a PE ratio of 19.14 and has a dividend yield of 3.96%. At Friday's closing price, the stock's net capitalization stands at $86.36 billion.
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