Analyst: HTC Settlement Could Net Apple $280M a Year

Apple and HTC reached a settlement in their ongoing patent infringement fight, and that deal includes a 10 year cross licensing deal. The two companies didn't reveal the settlement details, but Sterne Agee analyst Shaw Wu's sources have him estimating HTC could be paying Apple between US$6 and $8 per Android phone, which could get the iPhone and iPad maker up to $280 million a year.

HTC patent settlement could net Apple $280M a year"Financial terms were not disclosed but we believe Apple is likely getting a net licensing fee due to its much stronger patent portfolio and we think position as undisputed inventor of the modern smart phone with touchscreen," Mr. Wu said.

Mr. Wu based his licensing fee estimate on discussions with his industry sources, and is estimating HTC will ship between 30 million and 35 million Android-based smartphones in 2013.

Mr. Wu said HTC's licensing payment "is apparently lower than the range that Apple initially proposed."

He added, "But to put this in context, this compares to press reports indicating HTC pays MSFT $5 per phone running Android. One could argue that MSFT has much less patents and intellectual property than Apple in this space and so we think $6-$8 seems reasonable if not a relatively small price for HTC and others to pay to be able to sell a modern smart phone with touchscreen."

Apple and HTC announced their patent infringement settlement over the weekend after an extended legal fight that included an injunction blocking the sale of some HTC Android-based smartphones in the United States. The 10 year deal includes worldwide cross licensing of certain current and future patents, and will keep the companies from fighting in court.

The agreement also shows that Apple is willing to work with its competitors, which may put pressure on Samsung to finally agree to a deal -- something Apple says Samsung has been unwilling to do in their ongoing patent infringement fight.

"The big question is whether Samsung and Motorola will also reach settlement agreements," Mr. Wu said.

Mr. Wu is maintaining his "Buy" rating and $840 target price for Apple's stock. Apple is currently trading at $550.91, up 3.85 (0.70%).