Blackberry wins arbitration case against Qualcomm

Blackberry has won an arbitration case against Qualcomm and was given a preliminary $814.9 million in royalty payments that were made to Qualcomm. Blackberry asserted that it overpaid Qualcomm in royalty payments.

As a result of the victory, Blackberry shares jumped more than 18% while Qualcomm shares dropped by more than 2%. Sullivan & Cromwell LLP were the lawyers of Blackberry.

John Chen, Blackberry Executive Chairman, and CEO, said, “BlackBerry and Qualcomm have a longstanding relationship and continue to be valued technology partners. We are pleased the arbitration panel ruled in our favor and look forward to collaborating with Qualcomm in security for ASICs (application-specific integrated circuit chips) and solutions for the automotive industry.”

Qualcomm said that they do not agree with the decision but acknowledged that “it is binding and not appealable.” The company said, “The arbitration decision was limited to prepayment provisions unique to BlackBerry’s license agreement with Qualcomm and has no impact on agreements with any other licensee.”

Qualcomm has patents relating to modern mobile technology. This allows them to get royalties from mobile phone makers, regardless if it uses its chips or not. The majority of Qualcomm’s profits come from these royalty payments.

Blackberry and Qualcomm agreed to the arbitration last April 2016. Blackberry asserted that it overpaid royalties to Qualcomm relating to sales of subscriber units made between 2010 and 2015.
May 30 is the day when the final amount of the award will be announced.

Michael Walkley, Canaccord Genuity analyst, said that the award won by Blackberry will boost its balance sheet and increases the chance the company will be able to acquire companies for its growth in its software business. He upgraded the target price of Blackberry from $8 to $9.50.

Early this year, Apple sued Qualcomm, arguing that Qualcomm is “charging royalties for technologies they have nothing to do with.” Apple’s suit also asserts that Qualcomm is “attempting to extort” Apple into blocking investigation relating to the monopolistic practices of Qualcomm. Apple alleged that Qualcomm was charging at least five more times the market rate for patents on cellphones.

Earlier this week, Qualcomm countersued asserting that Apple was breaching its contract with Qualcomm as well as damaging Qualcomm’s reputation.

Also, the U.S. government accuses Qualcomm of using anti-competitive strategies to have a monopoly over particular semiconductors in mobile devices. The U.S. government said that Qualcomm was forcing mobile phone manufacturers to sign to unfair licensing terms.

Last December, Qualcomm was fined by South Korea’s antitrust regulator for antitrust laws violations.

In 2009, Blackberry once had almost 20% market share of mobile phones, but due to intense competition, now only has less than half a percent market share in mobile phones.

Blackberry has a $5.45 (Canadian) billion market valuation while Qualcomm has a market capitalization of $81.75 (U.S.) billion. Last year, Blackberry made $1.31 in revenues while Qualcomm had revenues amounting to $23.5 billion. Blackberry’s cash was at $1.7 billion based on its most recent earnings report. This arbitration case victory will boost further its cash position for strategic uses such as acquisitions.

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Samsung Earnings Forecast beats expectations

Samsung forecasts that their profits will increase by 48% in this first quarter of 2017. This is despite their top executives getting involved in a political scandal involving corruption and technical issues with their Galaxy Note 7 that forced them to withdraw it from the market.

Samsung executives were charged with bribery and embezzlement. Vice Chairman Lee Jae-Yong could face at least five years in prison if proven guilty.

Samsung is forecasting a first-quarter operating profit of 9.9 trillion won ($8.8 billion). This tops a survey done by Thomson Reuters of 18 analysts. The average forecast was 9.4 trillion won.

Samsung also sees a 0.4 percent growth in revenue for this quarter. This would yield a total of 50 trillion won of income which is still ahead of forecasts by analysts.
Greg Roh, HMC Investment Securities analyst, said, “This is better than expected.”

Lee Min-hee, Heungkuk Securities analyst, said, “The semiconductor business was likely the main driver for earnings.” She adds that profitability was also boosted by the solid sales of Samsung’s mid-to-low tier smartphones.

IBK Asset Management fund manager Kim Hyun Su, said, “Samsung will look to recover market share they lost last year and pump volumes even if they have to spend more to do so.”

Wall Street and investors are expecting Samsung to hit its best-ever quarterly profit this 2nd quarter of the year because of the debut of the Galaxy S8 smartphone on April 21. S8 features the largest screens to date for Samsung high-end smartphones.

This will be Samsung’s first premium device launch since last October when Note 7 was withdrawn from the market. Bryan Ma, vice president for devices research at IDC, said, “The initial indications for the Galaxy S8 are rather positive. Assuming that a Note7-like catastrophe doesn’t rear its ugly head again, Samsung’s phone sales should have the potential to add what is already a booming components business in the quarters ahead.”

20% of South Korea’s GDP is driven by Samsung’s sales. Many young Korean graduates aspire to join Samsung after passing the rigor of South Korea education system.

The first quarter is typically a slow season for smartphones and televisions. However, strong demand for mobile chips and smartphones displays buoyed their profits.

Analysts expect that Samsung’s semiconductor division to have done better than expected because memory chips supply remain tight while demand from global smartphone makers remained strong. The semiconductor division is likely to create more than 50% of Samsung’s quarterly income. Analysts are expecting the division to record sales of 5.8 trillion won for the first quarter.

Samsung’s share price continued to rise despite all the corporate drama. Overall, South Korea’s stock market has been performing well. Foreign flows into the stock market have totaled $3 billion. For the quarter, Samsung stock has been up 14%.

Samsung is the global leader in smartphones and display panels. According to analysts, Samsung will continue to benefit from strong global demand for NAND flash chips which are used for long-term data storage.

Samsung will elaborate more on its first quarter performance later this month.

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Consumers ready to spend BIG in 2016

According to recent reports, consumers in the United States are expected to spend a fortune online over the course of 2016. Many people will end up spending money on a whim because of tempting tactics used by retailers who want to encourage people to spend even more money. Online shopping has become hugely popular and successful over recent years because it provides people with greater choice, ease, convenience and flexibility. However, it can also lead to greater temptation to spend money –often money that the consumer cannot afford to spend.

Figures that were released with the report showed that in 2015 consumers in the United States spent around $338 billion on online shopping. While this is a staggering figure in itself the amount spent by online shoppers in the United States over the course of this year is expected to reach $373 billion. This averages out to just over $1950 per person reflecting an increase from just over $1800 per person for 2015.

Shoppers need to exercise caution

The research, which was carried out by Forrester Research, reflects just how reliant consumers have become on internet shopping – and some officials have said that often consumers spend money online totally unintentionally because of the way in which retailers marketing themselves and tempt shoppers to buy things they didn’t even realize they wanted or needed.

Experts also said that online shopping tended to result in more impulse purchasing and over-spending than shopping in bricks and mortar retailers, and this year is set to be a record one for online spending in America.

Those who do plan to shop for items online should make sure that they do not fall into the trap of purchasing items that they never intended to purchase, as this can quickly result in consumers being left short of money when it comes to essentials. Many retailers tempt consumers by bombarding them with emails, newsletters and social network posts, which can wear down the will of some people and encourage them to spend money. Other tactics used by retailers include adverts displaying items that you may have looked at in the past.

While many retailers may pass these tactics off as helping shoppers by making suggestions of items that they may be interested in, many end up being tempted into making purchases that they would otherwise not have spent their money on.        

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Alabama house committee approves payday loan reform bill

Alabama lawmakers received mixed reaction Wednesday when it approved a payday loan reform bill. The legislation would reduce the amount of interest payday loan stores charge, but would remove the modified six-month repayment period.

Reform advocates aren’t pleased, while industry leaders are only somewhat satisfied.

The House Financial Services Committee voted out a bill that would have given payday loan borrowers up to six months to repay the principal amount and the interest. Ken Johnson, chairman of the committee, said he doesn’t think borrowers needed six months to pay the average payday loan of $319.

Johnson argued that average payday loans amount to $300 then there isn’t a need to extend the payback period to six months since many consumers are using these services “responsibly.” He cited that many payday loan customers spend an average of 19 days to pay back a loan. When consumers visit websites they are looking for short term loans not loans with extended payback periods.

Lawmakers would decrease the effective interest rate from around 17.5 percent to 15 percent.

The bill would be sent back to the House for full approval. Officials will vote on the legislation Thursday, but there are concerns that the bill could vanish since there are only three days left in the legislative session and be sent to the “unpredictable committee.”

Supporters for reforms of the payday loan industry were jubilant when the Senate approved legislation that would institute a six-month repayment period as well as installment payments. Stephen Stetson, a policy analyst with Alabama Arise, told the Associated Press that this would have been a “proven solution.”

“That’s still really quick to repay a loan when most of the paycheck is already earmarked for other bills. So we would have liked to see six months,” Stetson said of the 45-day modification, adding that the entire process has been “frustrating.”

Payday loans are very popular in the state of Alabama. According to data from the Banking Department, more than 200,000 borrowers took out 1.3 million payday loans from August until March. This is the equivalent of 43,000 loans per week. The average loan amount was $322 with an average feed of $56.

Those who wanted to increase the payback period argue that it’s a compromise, using similar language found in Colorado. This, proponents say, enables the payday loan industry to continue operations, while protecting consumers. But payday lenders called the proposals a “global extinction event” during a committee hearing last week.

“The whole point of our product is that people like the convenience of having their payment due on their payday. People that get paid weekly or biweekly, that product will no longer be available to them,” said Jabo Covert of Check into Cash in a statement. “I think the members of the committee are all successful businessmen, and I think they’d be disappointed if someone told them to cut their revenue by 60 percent for what they do for a living.”

Republican State Representative and committee member Danny Garrett said the committee respects and supports reform. It just really all depends on what the reform looks like, Garrett noted.

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Employer may be good source for investing advice

There are many people in the United States who struggle with various aspects of their finances but are unsure with regards to how and where they can get advice in order to get these issues resolved. While most are aware that their employers provide assistance when it comes to retirement funding and pensions, a recent report has shown that many do not realize that the Human Resources departments at their places of work can also offer financial advice relating to other areas including personal finance, debt, and more.

More and more employers are now said to be providing workers with financial advice and resources over and beyond retirement funding. This includes savings, debt advice, budgeting and even mortgages in some cases. This means that employees who are keen to get advice and assistance with their financial issues and queries do not have to worry about going any further than their own HR department in many cases.

According to a recent study that was carried out, around 55 percent of employers now offer programs that can help employees when it comes to financial matters. Aon Hewitt carried out the study, which showed that more than half of employers offered advice on at least one other financial area in addition to retirement. Furthermore, the benefits consultation firm believes that by the end of this year the figure will have increased to around 77 percent.

Many employers are well aware of the importance of financial wellness for their employees. Financial worries such as debt and other money concerns can have a huge negative impact on the mental and physical health of workers. This in turn can lead to increased sick time, lower productivity and low morale – all things that employers want to avoid. By offering a financial wellness service in-house, it makes it easier for businesses to promote the overall wellbeing of their employees through helping them with financial matters.

Experts are advising all workers to find out from their employers whether there is any program in place to provide them with financial assistance. One official said that the availability of programs such as this could save workers a lot of time in terms of having to do their own research or contact outside agencies and professionals for help. It also means that they can get the advice and assistance that they need more quickly and with greater ease and convenience. 

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