CSR in $67.5m Broadcomm settlement

City A.M. Reporter
CHIPMAKER CSR said yesterday it had settled its legal battle over technology patents with US rival Broadcom, boosting the Bluetooth and Wi-Fi specialist’s shares.

CSR said it would pay $67.5m (£43.2m) to Broadcom over the next five years, the majority of which would be offset by a reduction in legal costs of at least $50m, to settle the dispute, which predates its acquisition of GPS chip firm SiRF in 2009.

Shares in CSR rose 15.56 per cent on the news to close at 413p, as analysts welcomed the settlement.

“We believe this is a very solid result for CSR from a strategic perspective as it removes the overhang of litigation and fears from some market participants of a big negative charge,” UBS said in a note.

Analysts at Espirito Santo Investment Bank said that due to CSR’s reporting structure it should result in about 10 per cent upgrades to consensus operating profit and earnings per share estimates for 2011.

“Apart from the financial impact, the settlement of patent dispute with Broadcom should remove a distraction for CSR’s management and customers,” they said.

The dispute related to accusations of patent infringement on components for TomTom GPS systems, which originated between SiRF and Global Locate, which is now owned by Broadcom.

Most recently CSR claimed that Broadcom was using technology that it had invented in its range of chips for mobile phones and media players.

As part of the settlement agreement, both parties have agreed not to pursue any further infringement actions against each other over the next five years.

CSR will pay an initial sum of $5m plus $12.5m for the next five years, but save legal costs of $10m a year.

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