Ericsson (NASDAQ:ERIC) Revenue Gets A Boost
Ericsson (NASDAQ:ERIC) announced on Monday that they were finally putting an end to a patent dispute between them and Samsung. The companies signed a cross-licensing deal which put an end to a long dispute and immediately Ericsson’s Q4 sales grew by some $652 million.
Ericsson, which is the biggest makers of network equipment for mobile, had sued Samsung earlier in 2012 claiming that they had infringed on their patents. The increasing involvement of Samsung which makes smartphones in the network equipment sector was what led to this dispute made a counter claim of 4.2 billion Swedish crowns.
In a statement, Ericsson said that the agreement would include an initial payment and further royalties from Samsung for a multi-year term which would increase the operating cash flow at Ericsson in the early time in 2014.
The company said that the settlement would lead to a rise in Q4 sales by around $652 million and a net income of $512 billion.
More about the deal
“This agreement allows us to continue to focus on bringing new technology to the global market and provides an incentive to other innovators to share their own ideas,” said Kasim Alfalahi, Ericsson’s Chief Intellectual Property Officer.
Alfalahi, however, declined to comment on the time period of the agreement with Samsung but mentioned that usually patent agreements last anything from 4-7 years. The company invests more than 30 billion Swedish crowns on an annual basis for R&D and did not reveal any further details of the agreement yet.
A common occurrence
This is not the first time that a parent infringement suit has come into the fray in a high tech industry like telecom in the recent years. This is because of the fact that despite most handsets sharing a lot of technology it has been a strategy of companies to force rivals to make licenses to use a flagship product. While this also implies that companies are desperately protecting their own investments and maximize their returns, the pressure from competition and the room left for dispute cloud up the entire situation for the lot.
In the early trading hours, the shares for Ericsson were up by almost 2.7% which outperformed most European technology stock which also saw a 0.4 per cent rise recently.