September 8 was a bad day for Qualcomm (NASDAQ: QCOM). The IP giant in smartphones lost a bid to dismiss the royalty lawsuit that Apple’s (NASDAQ: AAPL) are filing against Qualcomm. Markets pushed QCOM stock below $50 but the setback does not mean much just yet in the overall scheme of things.
Qualcomm will appeal the decision.
The case is far from over. The ruling was a request for an injunction. The case itself has not yet been tried on summary judgment. Still, if the ruling is any indication of what will happen next, investors are right to worry about Qualcomm’s methods in arriving at the royalty rates.
For now, Qualcomm will earn no revenue from Apple and its manufacturers. But once the court makes a decision, chances are good that Qualcomm will earn something back.
Uncertainty for the next year
The trial is scheduled for the Fall of 2018 before a San Diego jury. As markets wait, uncertainties over Qualcomm’s royalty model will get questioned. In the end, the courts will need to decide if Apple must honor the original contract or if the rates are so unjust that they will have to get renegotiated.
