Broadcom announced their Q2 profit took a 68 per cent plunge today, but scored a victory in a long-in-the-tooth patent dispute with Qualcomm.
Verizon deal breaks blockade
The telecom chip-maker has inked a licensing deal with Verizon Wireless, which will allow previously banned 3G phones back into the US market.
Last month, the US Internal Trade Commissions banned the import or sale of 3G phones using Qualcomm chips that were found to infringe on a Broadcom patent.
Under the agreement, Verizon will give Broadcom $6 for each phone, PDA or data card that uses the disputed chips, or up to $40m per calendar quarter and up to a maximum of $200m.
Verizon had previously supported Qualcomm in its attempts to overturn the ban, claiming it would keep new phone models out of US consumer hands. Whether the company lost its fighting spirit or has concluded the ban is unlikely to be lifted, Verizon appears to have made a striking about-face. As a part of the deal, Verizon has agreed to stop pushing for a reversal.
Qualcomm continues to fight the import ban, but has no one to turn but President Bush himself, who has until August 6 to reverse the decision.
Verizon and Broadcom have also entered into a new alliance where they will both develop and launch internet networking, phone and GPS-related hardware that exclusively uses Broadcom IP to prevent any future patent squabbles. Details and conditions of the agreement were not revealed.
And now for finances
Broadcom's income for the quarter took a dive to $34.3m from $106.1m in the same period last year. The company blames weak business for cable modem and wireless chips, but forecasts an upcoming recovery.
Revenue fell 4.6 per cent to $897.9m, short of analyst expectations of $900.57m on average.
The company forecasts third quarter revenue will be in the range of $915m to $940m.
Secret sex lairs
Even profit slumps must be a welcome relief to a company that has been in the news for having an ex-CEO accused of threatening disobedient workers with death, wild orgies, cocaine abuse and using whores to seal deals with customers. Not that we want to perpetuate a story like that, but you can read about it for scientific purposes right here. ®