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Broadcom Sees $40M in Quarterly Revenue From Verizon

Irvine chipmaker Broadcom Corp. is set to tack on an additional $40 million in royalty fees to its top line in the current quarter.

The revenue is what Broadcom collected in licensing fees from a deal it struck in July with cell phone service provider Verizon Wireless, a unit of New York’s Verizon Communications Inc.

Broadcom excluded the Verizon revenue when it gave third-quarter results and a fourth-quarter outlook on Oct. 24 because it was waiting to hear of Verizon’s sales, according to a Reuters report on a Broadcom meeting with analysts.

The chipmaker upped its fourth-quarter revenue forecast to $1.15 to $1.3 billion, including the fees from Verizon.

Broadcom earlier had forecast fourth-quarter revenue of $960 million to $990 million, excluding the fees.

The deal stems from Broadcom’s long-running feud over cell phone chip patents with San Diego chipmaker Qualcomm Inc.

The agreement allows Qualcomm’s chips, which were found to infringe Broadcom’s patents, to continue to be built into Verizon’s phones and be sold in the U.S.

Verizon agreed to pay Broadcom $6 for each device it makes that contain Qualcomm chips.

Qualcomm and Broadcom still haven’t settled their dispute.

The pact with Verizon gets around a U.S. Trade Commission ban on imports of some phones using the contested chips.

Verizon can pay Broadcom up to $40 million a quarter and up to $200 million for the life of the agreement, according to the terms of the deal.

Broadcom’s shares slumped with the broader market and the technology sector on Thursday. Its shares fell after one of its top customers, networking gear kingpin Cisco Systems Inc., gave an outlook below Wall Street’s expectations.

Cisco said some of its big customers may cut technology spending.

Broadcom’s stock was down as much as 6% on a recent market value of about $17 billion.

Its networking chips go into Cisco’s routers and cable modems.

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