iPhone maker sued by Ericsson over 5G patent licensing

    Ericsson has filed another set of patent infringement lawsuits against Apple in the latest salvo between the two companies over royalty payment for use of 5G wireless patents in iPhones.
    By HT TECH
    | Updated on Jan 18 2022, 11:58 PM IST
    Ericsson has filed patent infringement lawsuits against Apple (Representative Photo)
    Ericsson has filed patent infringement lawsuits against Apple (Representative Photo) (REUTERS)
    Ericsson has filed patent infringement lawsuits against Apple (Representative Photo)
    Ericsson has filed patent infringement lawsuits against Apple (Representative Photo) (REUTERS)

    Sweden's Ericsson has filed another set of patent infringement lawsuits against Apple in the latest salvo between the two companies over royalty payment for use of 5G wireless patents in iPhones. Both companies have already sued each other in the United States as negotiations failed over the renewal of a seven-year licensing contract for telecom patents first struck in 2015.

    Ericsson sued first in October claiming that Apple was trying to improperly cut down the royalty rates while the iPhone maker filed a lawsuit in December accusing the Swedish company of using "strong-arm tactics" to renew patents.

    Also read: Looking for a smartphone? To check mobile finder click here.

    "Since the prior agreement has expired, and we have been unable to reach agreement on the terms and scope of a new license, Apple is now using our technology without a license," an Ericsson spokesman said.

    Apple did not immediately respond to a request for a comment.

    Patent lawsuits are quite common among technology companies as every dollar saved could amount to significant amounts over the duration of the agreement as companies such as Ericsson charges between $2.5 to $5 for every 5G handset.

    The Swedish company invests about $5 billion every year in research, has a portfolio of more than 57,000 patents, and royalties from its patent portfolio account for roughly a third of its operating profit.

    Last year Ericsson settled patent lawsuits with Samsung after several months of court battles that temporarily hit its quarterly earnings. Pending dues are usually cleared after a settlement is reached.

    Big Tech Needs Big Profits With Multiples Under Fire: Tech Watch

    (Bloomberg) Technology stocks have stumbled into the new year, with the Nasdaq 100 Index down about 6% on fears that the Federal Reserve’s efforts to combat inflation will curb valuations for the sector. The benchmark is slumping again Tuesday with Facebook parent Meta Platforms Inc. falling as much as 4.1%, as bond yields spike anew.

    So if ever there was a time for megacaps like Apple Inc. and Microsoft Corp. to show off surprisingly strong profit growth, it’s now. Unfortunately for bulls, that’s not what’s in the forecast for fourth-quarter results.

    With Citrix Systems Inc. slated to kick off earnings Wednesday, profits for S&P 500 tech companies are projected to expand 15% after three straight periods of better than 40% growth, Bloomberg Intelligence data show. Estimates are worse for the heavyweights -- Apple, Microsoft, Amazon.com Inc., Google parent Alphabet Inc. and Facebook owner Meta Platforms Inc. Their profits are projected to expand just 5%, the slowest since 2020’s second quarter.

    “Earnings is of the most importance right now to maintain the balance with rates moving higher,” said Michael Casper, an equity strategist with Bloomberg Intelligence. “It is critical that these companies hit or beat estimates just to tread water.”

    The tech sector, which contains many companies valued mainly on the promise of future profits, has been under pressure because of the surge in the U.S. Treasury yields that are used to value long-dated earnings in today’s dollars. The higher yields rise, the thinking goes, the less those future earnings are worth now, placing more importance on bigger profits to make up the difference.

    So far, most of the carnage has played out in corners of the market with the highest valuations such as software companies and innovation stocks championed by Cathie Wood’s ARK Investment Management. Zoom Video Communications Inc. and DocuSign Inc., for example, have lost more than half of their market values from peaks. Megacaps like Apple, down about 5% from a record, have held up relatively well.

    Many U.S. tech stocks are being treated as “a safe harbor” because of their robust earnings, strong balance sheets and mature businesses, according to Kristina Hooper, chief global market strategist at Invesco.

    Tech “is the ultimate secular growth play,” she said in an interview. “There will be more spending on cybersecurity, cloud computing, software, all these major areas of tech.”

    The sector has been among the most reliable at beating Wall Street projections. Last quarter, more than 90% of the companies in the S&P 500 information technology group beat profit estimates, the best performance among the index’s main sectors.

    Don’t expect a repeat, says Stephen Hoedt, managing director of equity research at Key Private Bank.

    “We’re likely to see earnings surprise to the upside in the quarter, and over the course of the year, but I don’t think we’re likely to see the same level of beats that we’ve seen over the past few quarters,” he said.

    Tech Chart of the Day

    The benchmark index for semiconductor stocks has had a good run in the past six months, outpacing the Nasdaq 100 Index. Now comes a test as Intel Corp. and Advanced Micro Devices Inc. prepare to report earnings. Stocks have been riding higher on unprecedented demand for chips used in everything from refrigerators to cars, leading to a severe crunch in 2021.

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    First Published Date: 18 Jan, 11:58 PM IST
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