A patent dispute between chip designer CSR and US rival Broadcom seems to have escalated.
CSR said today that Broadcom had added extra patents to its case, which involve a business recently bought by CSR, SiRF. But CSR added that it had taken into account this possibility in its planning for the combined business. It said:
Intellectual property litigation is commonplace in our industry and poses risks and uncertainties that may materially and adversely affect or disrupt our business, customer relationships, expenses or results of operations. We will continue to take appropriate steps to address any further claims that may be made by Broadcom or any third parties.
These patents have previously been included in Broadcom's case against CSR with the ITC, and the US Patent and Trademark Office (USPTO) has initially rejected them. Broadcom's actions change little if anything regarding the investment case for CSR.
CSR remains undervalued. It has a good position in its markets and appears to have credible and relevant technology. However, it has been unable to provide much in the way of good news this year and its shares have suffered as a result. Third quarter results guidance was disappointing but there is little tangible evidence that Broadcom has laid waste to CSR despite what market commentary and the share price might suggest. We maintain our buy recommendation and 410p share price target, equivalent to an estimated 2010 PE of 10 times (ex cash and share based remuneration).
