Samsung to pay Ericsson $650 million plus royalties to end patent spat

Mon Jan 27, 2014 7:54am EST
 
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By Simon Johnson

STOCKHOLM (Reuters) - Samsung Electronics Co will pay Ericsson $650 million along with years of royalties to end a technology license spat, the Swedish company said on Monday.

The world's No. 1 mobile network equipment maker sued Samsung in 2012 on the grounds that the Korean firm had infringed patents involving technology for clearer voice transmission, touchscreen functions and network efficiency.

The smartphone and tablet maker, which is increasingly active in network equipment, made a counter claim.

The initial payment will lift fourth-quarter sales by 4.2 billion Swedish crowns ($652 million) and net income by 3.3 billion, Ericsson said in a statement.

Analysts in a Reuters poll had forecast fourth quarter net sales of 65.1 billion crowns and net income of 4.0 billion.

Ericsson declined to give further details of the agreement or what royalties Samsung would pay, but its shares rose 2.4 percent by 1123 GMT (6.23 a.m. ET) as markets anticipated billions of crowns of extra revenue for the Swedish firm for years to come.

Kasim Alfalahi, Ericsson's Chief Intellectual Property Officer, would not say how long the agreement with Samsung was, but said patent agreements generally cover four to seven years.

"Ericsson's settlement with Samsung is going to be an important future driver of its earnings," JP Morgan analyst Rod Hall said in a note.   Continued...

 
A man walks out of Samsung Electronics' headquarters in Seoul January 6, 2014. REUTERS/Kim Hong-Ji