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Why Apple Stock Eked Out a Market Beat Today


What happened

There wasn’t much new or exciting reported with Apple (AAPL -0.34%) stock on Friday, save for a fresh development in the legal sphere. Apple enthusiasts tend to get excited about the stock when the company announces a flashy new product or some positive financial news, not so much when the latest is about the law.

So while its latest settlement and resulting licensing deal didn’t bring back a horde of bulls into the stock, it did give the company’s stock a beat over the S&P 500 index. Apple closed the day only 0.3% lower, against the bellwether index’s 0.7% decline.

So what

Early Friday, storied electronics component maker Ericsson (ERIC 0.78%) announced that it signed a global patent licensing and settlement agreement with Apple. At a stroke, this binds the two companies together in a renewed partnership and retires a dispute over 5G technology patents.

Previously, Ericsson and Apple had sued and counter-sued each other following their failure to renew a seven-year licensing contract on such technology. That deal was finalized in 2015.

Ericsson did not provide much detail about the new agreement; the U.S. tech giant has yet to comment publicly on it. Ericsson did quote its chief intellectual property officer Christina Petersson as saying that it “is of strategic importance to our 5G licensing program.”

“This will allow both companies to continue to focus on bringing the best technology to the global market,” she added.

Now what

It was somewhat ridiculous that Apple and Ericsson, more or less cooperative partners in the past, would get into unproductive tussles over patent licensing. While we aren’t privy to the particulars of the new arrangement, it’s indisputably a plus for both companies; the fewer legal headaches each has to cope with, the better.

Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.



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