How NXP Semiconductor stock rose 18% last month
stock NXP Semiconductor (NXPI -0.22%) It rose 18.4% in November, according to data from S&P Global Market Intelligence. Dutch-American microchip maker NXP posted solid profits last month, but the fuel for the NXP fire actually came from a different source. The long-running legal dispute was resolved on November 9. The results weren’t in NXP’s favor, but investors applauded: The legal cloud was extinguished at a modest financial cost.
Long legal drama moves forward
An RFID engineer is talking about a patent infringement case. imp (PI -2.91%) Impinj claimed that a much larger competitor essentially copied important parts of its patent-protected RFID endpoints. A jury in Waco, Texas, ruled in favor of Impinzi on November 9, and Legal Media obtained the decision on November 13.
Unconfirmed rumors of the ruling sent NXP’s stock price up 3.5% on November 10, and the full announcement led to another 5.4% rise on November 13. Of course, Impinj’s investors received this news with more enthusiasm. The RFID specialist’s stock price rose 4.8% and 9.7%, respectively, on the same two dates.
The legal battle is far from over, and both sides may be pursuing appeals right now. But there is some light at the end of the legal tunnel, and the $2 million fine is much lower than the $18.5 million awarded by a California jury last summer. The relationship between jury decisions in Texas and California is unclear to me, but the proceedings began with identical Impinj filings in 2019. Either way, the Texas ruling is another small step forward in a long and confusing legal dispute.
Looking at patent litigation
I’m not a lawyer, but I know investors hate uncertainty. One way or another, resolving this confusion will allow both Impinj and NXP investors to sleep better at night.
The two companies may not have settled this lawsuit yet, but the end appears to be near. In an ideal world, the parties would have lunch and resolve their differences, including licensing agreements and patent royalty payments. But like I said, I don’t have a law degree and I have no say in how NXP and Impinj run their intellectual property operations.
It’s nice to see this issue getting closer to a final resolution. However, RFID endpoints make up a small portion of NXP’s revenue, while automotive computing and industrial products generate three-quarters of its overall revenue stream. So the Impinj dispute shouldn’t move the financial needle much for NXP, regardless of how it’s resolved.
Meanwhile, NXP maintains solid off-center investments in autonomous vehicles and industrial automation, and maintains a low net price-to-earnings ratio of 14.1.
