Qualcomm Shares Rise After Judge Halts Ban
Analysts welcomed a federal judge's ruling to halt an import ban on mobile phones using chips from Qualcomm, which sent shares of the wireless technology company higher Thursday.
Judge Haldane Mayer's ruling Wednesday was in response a request by several cell phone makers to stay the ban the federal government ordered in June. It was a rare victory for Qualcomm in its ongoing legal battle with rival Broadcom.
The wireless chip supplier said the stay, pending appeal, will allow third parties such as Motorola and Samsung Electronics to import certain handsets into the United States.
Lehman Brothers analyst Tim Luke called the ruling a "material positive" for the company, "in that we believe phone imports by its customers should now continue unhindered through the upcoming critical holiday season while the appeal process unfolds."
Luke noted that the ongoing, multiple legal disputes may continue to weigh on Qualcomm investor sentiment over the next several months, but added he expects shares to lift in the near-term. He maintained a rating of "overweight" on the stock.
Thomas Weisel Partners analyst Hasan Imam said the ruling eases the financial burden the ban had imposed on Qualcomm. It also shows companies such as Sprint Nextel and Alltel, which employ a wireless standard known as CDMA, an "alternative path to settling with Broadcom," he added.
In addition, the ruling indicates that the chance of Qualcomm winning some legal battles is "better than ever, although the stock is currently building in a worst-case scenario."
Qualcomm's shares rose 38 cents to $38.25 in late morning trading, after reaching as high as 39.30 earlier in the day. Broadcom's shares rose 19 cents to $35.56.