It was reported today that Sweden’s Ericsson AB and Apple Inc have signed a 7 year cooperation deal that would bring an end to the outstanding patent litigations. The report is being seen as a huge positive by analysts and investors on the street.it is important to point towards the fact that Ericsson which is the world’s largest wireless equipment maker said that the two companies would work together in the future and cooperate towards development of fifth generation phones (5G). The company said that the two companies would also work together in developing video and wireless networks.
According to the details of the deal, Apple would pay an initial payment to Ericsson and follow that up with royalties. It is imperative to state even though the amounts were not mentioned, Ericsson said it expects revenues this year of some $1.4 billion which would include positive effects of the settlement deal with Apple Inc and other licensees. The agreement includes a cross license that would cover patents owned by both the company including the GSM, LTE and UMTS standards which are used in mobile technology. Analysts on the street are looking at the deal as a huge positive for Apple Inc and believe it would lead to the removal of contingent claims. Analysts believe the two companies could usher in new network technologies which could be used by Apple Inc on its new generation of iPhones.
Shares of Apple Inc, have been in a downtrend over the last couple of weeks. The stock has broken below the important support levels at $107.50 which is being seen as a huge negative. The shares currently trade below all important daily moving averages. The momentum indicators for the stock continue to trend lower indicative of the strong buying interest which is a huge negative.