Qualcomm (NASDAQ:QCOM) and its investors had an interesting year in 2019. The semiconductor giant’s share prices were headed for the moon in April, only to lose most of that jump the next month. The stock still held onto a significant edge after all that, then closed out the year with a bang. According to data from S&P Global Market Intelligence, Qualcomm ended the year with a total gain of 55%.
In April, Qualcomm finally settled its intellectual property differences with Apple, scoring a one-time payment of at least $5 billion and a six-year cross-licensing agreement between the two technology titans. The settlement drove Qualcomm’s stock 23% higher in a single day and 56% higher over the next two weeks.
The courtroom triggered Qualcomm’s big drop in May. All legal complaints between Apple and Qualcomm may have been settled, but the Federal Trade Commission also ruled against Qualcomm in January. The other shoe dropped in May as U.S. District Judge Lucy Koh issued a 233-page final verdict, barring the company from using some of its most effective sales tactics. The main issue sits with Qualcomm’s habit of requiring large-scale chip buyers to also sign a licensing agreement to use Qualcomm’s technologies.
“In combination, Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process,” Judge Koh wrote.
This decision is now on appeal and its enforcement has been put on ice for the time being, but Qualcomm could lose its best weapons in the fight to win big chip-supplier deals.
Finally, Qualcomm delivered a clean beat-and-raise fourth-quarter report in November. The muscular report lifted Qualcomm’s share prices by 11% over the two days following its release.
5G wireless chips will sit at the center of Qualcomm’s business for the next few years. The company was an early supplier of 5G chips for high-end flagship devices and has already moved the 5G technology stack into its latest set of midrange phone chips. 5G was the central theme in Qualcomm’s fourth-quarter earnings call, mentioned 115 times.
“As we continue to expand our 5G product portfolio, our design wins are also increasing,” CEO Steve Mollenkopf said on that call. “We continue to expect a positive inflection point as 5G ramps beginning in our fiscal second quarter. With the conclusion of our cost plan and significant share repurchases over the last year, we are poised to deliver margin expansion, an outsized growth in earnings, and earnings per share as revenue growth accelerates.”
The final outcome of Qualcomm’s remaining legal troubles could slam the brakes on these ambitious 5G goals. Stay tuned for more lawsuit-related Qualcomm news in 2020.