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April 30, 2009

Qualcomm, Broadcom settle patent dispute

Agreement ends litigation between the companies worldwide

By CBR Staff Writer

Qualcomm and Broadcom Corporation announced that they have entered into a settlement and multi-year patent agreement. The agreement will result in the dismissal with prejudice of all litigation between the companies, including all patent infringement claims in the International Trade Commission and U.S. District Court in Santa Ana, as well as the withdrawal by Broadcom of its complaints to the European Commission and the Korea Fair Trade Commission.

Under the agreement, the companies have granted certain rights to each other under their respective patent portfolios. Qualcomm will pay Broadcom $891m over a four-year period. The terms of this agreement will not result in any change to Qualcomm’s 3G (e.g., CDMA2000, WCDMA and TD-SCDMA ) and 4G (e.g., LTE and WiMAX ) licensing revenue model.

Qualcomm said that it made an operating loss of $10m, reflecting a $748m patent litigation settlement with Broadcom, compared to operating income of $813m in the same period last year. Diluted net loss per share was $0.18 compared to diluted EPS of $0.47 a year ago. Operating cash flow grew 33% to $1.26 billion.

According to the company, equipment and services revenue declined 18% to $1.41 billion, and licensing and royalty fees rose 18% to $1.04 billion.

For the six-month period, the company reported a net profit of $52m compared to $1.53 billion a year ago, on revenue down 1% at $4.97 billion.

Paul E Jacobs, chairman and chief executive at Qualcomm, said: Our second-quarter revenues were at the high end of prior guidance. The Broadcom settlement will resolve all pending litigation between the parties, eliminating uncertainty, employee distraction and cost related to protracted litigation is a positive for our stockholders, customers, partners and the wireless industry. We continue to grow key R&D programs, while closely managing SG&A expenses. Our 2009 device shipment estimate remains unchanged.

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