Impact of Intel (Nasdaq:INTC), NVIDIA (Nasdaq:NVDA) Deal Uncertain

The impact of the agreement between Intel (Nasdaq:INTC) and NVIDIA (Nasdaq:NVDA), as far as it relates to how it'll be reflected in the financial results of Intel remain uncertain, as the company has yet to finalize how they're going to handle it in that regard.

Canccord said, "The world’s largest semiconductor company announced on Monday that it has entered into a new comprehensive long-term patent cross license agreement with NVIDIA. The companies have also resolved pending litigation, ending all outstanding legal disputes between the companies. Under the transaction, Intel receives a license to NVIDIA’s patents subject to the terms of the agreement. NVIDIA receives a license to Intel’s patents subject to the terms of the agreement, including that x86 and certain other products are not licensed to NVIDIA under the agreement. Intel and NVIDIA have also exchanged broad releases for all legal claims, including any claims of breach of their previous license agreement. Intel will pay NVIDIA $1.5 billion over the next five years. With the exception of one agreement term that is confidential, the agreement will be made available in filings with the Securities and Exchange Commission. NVDIA will amortize the payments quarterly for an annual contribution of $233 million to operating income and $0.29 to EPS. Canaccord Genuity Semiconductor Analyst Bobby Burleson remained bullish and raised his estimates on NVIDIA following this news and positive checks into key 2011 drivers ahead of Mobile World Congress (February 14-17). He is not yet modelling the impact of the Intel agreement, as the company has yet to finalize how it will be reflected in its financial results. Burleson also believes that the notebook market share for the company should increase, with the company highlighting that its market share in notebooks could increase from just under 40% to roughly 60% over the next several quarters. As well, NVIDIA appears to be poised to win the majority share of Google (Nasdaq:GOOG) Android-based tablets."

Intel was trading at $21.24, up $0.22, or 1.02 percent, as of 1:22 PM EST. NVIDIA was trading at $22.42, gaining $2.11, or 10.39 percent.