| | "$100 million is chump-change for Apple," said Charlie Wolf, an analyst who follows Apple at Needham & Co. As of July 1, Apple had $8 billion in cash.
The deal will also allow Apple to recoup an undisclosed portion of its licensing fee if Creative is successful in licensing its patent to others. As a result, attorneys said, Apple could effectively increase the cost of competing in the digital music player business by helping finance Creative's pursuit of licensing deals with and litigation against other companies.
An Apple spokeswoman said the company will record the Creative patent license as an asset that will be amortized over "many years" and that the company doesn't expect any material impact on its finances as a result of the deal. Analysts said the settlement costs for Apple were minor compared to the hefty damages it could have faced if it had lost in court.
"When you have a settlement with a large player, that sends a signal that this is a serious claim," said Allonn E. Levy, an intellectual property attorney at Hopkins & Carley in San Jose, CA
Microsoft Corp., for instance, is expected to enter the market later this year with a product called Zune, and cell phone makers and wireless carriers are introducing music-oriented handsets. A Creative spokesman said the company is "open to exploring amicable solutions with companies that exploit the patent," though he said it was difficult to tell whether the Microsoft product will fall into that category since Creative hasn't seen the Zune device yet.
A Microsoft spokeswoman didn't return a call for comment.
The Wall St Journal |
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