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The Zicom Group Limited (ASX: ZGL) share price has rocketed 66.7% higher today on news the equipment manufacturer has entered the surgical mask game. Zicom Group announced that it will leverage its in-house engineering and manufacturing experience to design and build its own production line to manufacture masks.

What does Zicom Group do?

Zicom is a manufacturer of marine deck machinery, hydraulic system services, concrete mixers, foundation and geotechnical equipment, and fluid metering stations. With most of its customers in the capital goods business, many have held back buying decisions due to current uncertainty, adversely impacting Zicom’s revenues. There has been a slump in the offshore marine sector and the precision engineering and technologies sector has not been spared the impact of the trade war. 

Why the pivot into face masks? 

Zicom Group says the move into face masks is part of its corporate social responsibility obligations, given global shortages. The company can leverage internal experience manufacturing medical technology as well as the short term availability of manpower due to COVID-19 lockdown measures. Having built its own production line, the company has entered production within 3 months of conception. 

Initial capacity allows Zicon to produce 3 million surgical masks a month. The masks have been approved by regulatory authorities in Australia and Singapore, with European regulatory approval expected in the next few weeks. US approval is expected within the next 3–4 months. The focus is on producing high quality surgical masks to provide protection to healthcare personnel and the general public. Zicom says this distinguishes its product from ordinary face masks being sold widely. 

What’s next for Zicom? 

Zicom says growing demand for high quality surgical masks has convinced it of the long-term commercial feasibility of its latest project. Soft launch has just been initiated, and has apparently shown an encouraging pick up in sales.

Zicom has decided to develop and potentially expand this new business and is confident it will generate recurrent revenue to supplement the capital goods business. This will no doubt serve as a relief to investors after first half revenues fell 40%, leading to a $4.2 million loss for the period. 

The Zicom share price soared by almost 67% today, to close trade at 7.5 cents per share. 

More reading

• 3 ASX dividend shares to buy for income
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%
• Investing $1,000 in these ASX shares could be a smart move
• If you invested $10,000 in Afterpay shares in March, this is how much you’d have now
• 3 reasons the Altium share price is in the buy zone

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Altium Limited (ASX: ALU) share price was a positive performer on Monday and pushed higher following its full year results release.

The electronic design software company’s shares ended the day almost 1.5% higher at $33.92.

Is it too late to buy Altium shares?

I don’t believe for a second that it is too late to buy Altium shares.

In fact, I continue to believe that it remains one of the best buy and hold options on the local market. Here are three reasons why:

Favourable tailwinds.

Altium’s electronic design software platform and businesses are benefiting from very favourable tailwinds at present. The rapidly growing Internet of Things and artificial intelligence markets are underpinning the proliferation of electronic devices globally and driving strong demand for its offering. The good news is that these tailwinds are only just building and Altium looks set to have the wind in its sails for a long time to come.

Positive long term growth potential.

In FY 2020 Altium achieved revenue growth of 10% to US$189 million despite the negative impact of the pandemic on its end of year sales. Pleasingly, given the aforementioned tailwinds, Altium’s growth isn’t expected to stop any time soon. This morning management revealed that it remains committed to its 2025 target of US$500 million in revenue. And while it acknowledges that the pandemic could delay it achieving this by 6-12 months, it appears confident it will get there.

Market dominance.

As well as targeting US$500 million in revenue by 2025, the company is aiming to grow its active subscribers to 100,000. This will be up from 51,006 in FY 2020. Management believes that if it achieves this it will have market domination and be in a position to compel key industry stakeholders to support its agenda to transform electronic design and its realisation. This will then leave Altium well-placed to start the next level of its growth.

More reading

• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%
• ASX 200 down 0.85%: JB Hi-Fi impresses, Altium shoots higher, Bendigo and Adelaide Bank sinks
• Why Altium, Beach, JB Hi-Fi, & Starpharma shares are charging higher
• Altium share price on watch after FY 2020 result
• 3 five-star ASX shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Enabling Australians to withdraw up to $20,000 from their superannuation funds has been one of the more controversial government policies for dealing with the coronavirus pandemic.

Eligible Australians were allowed to withdraw up to $10,000 in the 2020 financial year (FY20) from their superannuation accounts, and have access to a further $10,000 in FY21 (up until December).

The early super withdrawal scheme is being administrated by the Australian Taxation Office (ATO).

What are the arguments?

Proponents argue that it is necessary for Aussies undergoing financial and economic hardship to have access to ‘their’ money to ride out the crisis.

On the other hand, critics of the scheme argue that it is undermining the retirement safety net of our country. Reports that anyone who applies to access the money has been allowed to withdraw from super, regardless of hardship, have further damaged the scheme’s credibility (although the ATO is reportedly following these up).

Regardless of your views, it’s hard to argue with damning new analysis that has just been released.

ASX exchange-traded funds (ETFs) provider BetaShares has released modelling of the early super withdrawal scheme. It makes for some fascinating reading, to say the least.

Early super withdrawals prove costly

Its headline finding is that the $30 billion (as of 29 July) in early super withdrawals will cost the retirement system between $100 billion and $130 billion in the coming years. This is made up of lost returns from investments that would have added value had they remained within a fund. Extra pension payments the government will have to pay as a result are also included.

BetaShares CEO, Alex Vynokur, had this to say of the early superannuation withdrawal modelling:

This was a well-intentioned but misguided policy from the start. The true cost of allowing people to access their super early will ultimately be paid by future Australian governments and taxpayers… An amount between $100 billion and $130 billion represents a very significant future shortfall (which will only increase as further super is released early). It will need to be funded by future Australian governments and therefore the Australian public will ultimately bear the cost, as those who have withdrawn super will be less able to fully fund their own retirement needs.

The BetaShares modelling also shows that young Australians have the most to lose from this policy. It estimates that a $10,000 withdrawal represents a lost $70,400 in retirement funds for an investor with 40 years until retirement, using consumer price index (CPI) + 5% modelling. If CPI + 7% is used, the figure jumps to $149,745. This comes after Treasury figures quoted by BetaShares revealed that half of all early super release claims are being made by people aged under 35.

The report also quotes data that reveals 64% of people who accessed early release “spent the money on discretionary items such as clothing, food, gambling and alcohol”.

Sobering stuff indeed!

More reading

• 3 ASX dividend shares to buy for income
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%
• Investing $1,000 in these ASX shares could be a smart move
• If you invested $10,000 in Afterpay shares in March, this is how much you’d have now
• ASX stock of the day: Zicom share price rockets 66% high on surgical mask investment

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telstra Corporation Ltd (ASX: TLS) share price tumbled to a three-month low on Monday after the stock was downgraded by a leading broker.

Shares in Australia’s largest telco fell 1.9% to $3.05 when the S&P/ASX 200 Index (Index:^AXJO) declined 0.8% today.

If it’s any consolation to shareholders, Telstra’s peers also finished in the red. The TPG Telecom Ltd (ASX: TPG) share price slipped 1.2% to $7.36 while the Vocus Group Ltd (ASX: VOC) share price gave up 1% to $2.92.

Broker downgrade weighs down TLS share price

Telstra was the laggard as it was weighed down by JPMorgan’s downgrade. It cut its recommendation on the stock to “neutral” from “overweight”.

The move comes after the company posted Telstra’s disappointing FY20 profit results last week, which prompted the broker to cut its earnings forecast for the group.

“Our initial review has highlighted a number of significant structural challenges facing the company,” said the broker. “Furthermore, an estimated 4.2% dividend yield is not overly compelling.”

Structural headwinds

One of these structural challenges include the impact of the NBN eroding profit margins on Telstra’s fixed broadband business.

Rising competition on Telstra’s mobile division is cited as another headwind, while the COVID-19 travel restrictions have decimated its mobile roaming revenue.

Mobile is a key earnings driver for Telstra, which tried to lift prices on its mobile plan recently. That backfired as competitors doubled down on low prices to win market share from the market leader.

Telstra’s dividend is unsustainable on payout guidance

What is concerning for shareholders is the dividend. JPMorgan is forecasting a cut in the group’s annual payment to 13 cents a share from 16 cents.

That’s below consensus with the average broker estimate tipping a 14 cents a share payout. But JPMorgan believes 13 cents is all Telstra can afford. This is because that would represent 90% of Telstra’s forecast net profit – which is the top end of Telstra’s payout ratio.

“While Telstra does not provide dividend guidance, it indicated at the result that EBITDA would need to be ~A$7.5-$8.5 billion to maintain its 16cps dividend, well above guidance of A$6.7 billion,” added JPMorgan.

How Telstra can keep paying a 16cps dividend in FY21

However, not every broker agrees with this. Goldman Sachs believes Telstra could keep paying 16 cents as management may not strictly apply its payout ratio policy.

“Although 16cps is now unsustainable across FY21-22 on the existing payout policy, we note TLS further shifted its dividend focus to FCF [free cash flow] (i.e. TLS justified the 99%, out-of-policy EPS payout as this was well supported by cashflow),” said Goldman.

“Hence, we have not revised our 16c dps, believing Telstra will maintain this through FCF, if it believes that is on track for $7.5bn by FY23E.”

Goldman stuck to its “buy” recommendation on the stock, which is also on its “conviction list”. The broker’s 12-month price target on Telstra is $3.90 while JPMorgan’s target price is $3.40 a share.

More reading

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• What experts are saying about JB Hi-Fi’s profit results as the stock surges to record
• Millennials be warned! ASIC to examine irresponsible ‘social trading’
• These 3 ASX stocks just got upgraded by top brokers to “buy” today
• ASX 200 down 0.85%: JB Hi-Fi impresses, Altium shoots higher, Bendigo and Adelaide Bank sinks

Motley Fool contributor Brendon Lau owns shares of Telstra Limited. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Brainchip Holdings Ltd (ASX: BRN) share price has risen by 30% since last Tuesday, and 109% over the past month. This ASX-listed artificial intelligence (AI) company is the largest of its type in the world. It is currently developing what is known as a neuromorphic Akida chip, which will mimic the human brain and nervous system and is a first-of-its-kind technology.

Nevertheless, the company already has products in the marketplace that generate revenue. For example, the Akida neural chip is useful for facial recognition and pattern recognition. Accordingly, casinos use it to monitor patterns of play, payout amounts, dealer behaviour and much more. Many international airports also use the company’s products to detect terrorism suspects, as do 2 European subways to detect wanted criminals. 

What moved the Brainchip share price?

The Brainchip share price moved today after the company announced it has partnered with Magik Eye Inc., developers of revolutionary 3D sensors.  The agreement is to market a breakthrough solution for object detection, classification and gesture recognition by combining MagikEye’s invertible light 3D depth sensing technology and the Akida neuromorphic processor.

This opens up a new sales channel into Japan. Customers for fast 3D object detection and recognition includes robotics, automotive and emerging consumer products, such as virtual reality and others. The companies can jointly address gesture recognition in smart home applications, such as gaming and other consumer products. As well as, smart transportation and smart city applications are all primary markets for collaboration. This includes advanced driver assistance systems and autonomous vehicles.

Management commentary

In today’s announcement, Richard Wawrzyniak, principal analyst at market research company Semico Research Corp. highlighted that 3D imaging is attracting a good deal of interest in the market and commented that the BrainChip architecture is the “right fit for this class of operations”. He added:

It is not surprising their solution would be paired with the MagikEye’s Invertible Light Technology for real-time object detection in all types of applications, where low power and high throughput are valued elements for success. Semico believes this technology partnership is a winning combination for the market.

Commenting on the partnership, Louis DiNardo, Brainchip CEO stated:

Our relationship with MagikEye is exciting. The innovation brought to the market by their proprietary Invertible Light technology is impressive and this collaboration provides both companies an opportunity to address large and growing markets with outstanding technology to solve difficult real-world challenges.

Brainchip share price

The Brainchip share price rocketed by 17.5% during Monday’s trading, and is up by 30.5% since the open of trading last Tuesday. Its market cap is currently $345 million. Over the past month the Brainchip share price has risen by 113.6%, and it is up by 370%, year-to-date. 

More reading

• Brainchip share price surges 9% on new financing facility
• 3 unloved ASX growth shares that could make you rich

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australia is officially in recession, with the economy shrinking 0.3% in the March quarter. But this is a recession like no other – coronavirus lockdowns and travel restrictions may be shrinking the economy, but they are also redirecting spending.

Consumers unable to enjoy holidays and travel are shifting their spending to the home, resulting in booming sales for some. Here are three ASX retail shares raking it in regardless of recession. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi sales have surged as customers set up home offices and invest in entertainment options. Full year sales grew 11.6% to $7.9 billion as customers spent more time working, learning, and entertaining at home.

This led to a 33.2% increase in profits which reached $332.7 million. JB Hi-Fi has also been investing in its e-commerce capacity, which has paid off with online sales up 50% over the year and 134% in the fourth quarter. This capacity will help the ASX retail share as online sales ramp up with Melbourne store closures. 

Kogan.com Ltd (ASX: KGN) 

Online-only retailer Kogan has shone in 2020 with a surge in active customers driving record performance. Gross sales increased 39.4% on the prior year to $768.9 million as customers shifted to online shopping in the face of store closures.

CEO Ruslan Kogan said: “There is a retail revolution taking place as more and more shoppers learn about the benefits of E-commerce.” This revolution resulted in a 55.9% increase in Kogan’s profits, which reached $26.8 million in FY20. This enabled the payment of a final dividend of 13.5 cents per share, up 64.6% on the previous year. 

Adairs Ltd (ASX: ADH) 

Omni-channel homewares retailer Adairs has benefitted from customers spending more time at home, and subsequently more on Adairs products.

Despite widespread store closures in April and May, the group grew sales 12.9% to $388.9 million in FY20. Online sales were a strong contributor, accounting for $124.2 million or 31.9% of total sales. Online furniture retailer Mocka, which Adairs purchased last year, saw sales increase 50.2%.

The strong sales growth led to a 19% increase in net profit after tax, which reached $35.3 million. This allowed Adairs to declare a dividend of 11 cents per share (fully franked).

Foolish takeaway

We might be in recession, but while lockdowns and travel restrictions continue, discretionary spend is being diverted to home furnishings and entertainment. That leaves these ASX retail shares to rake in the proceeds. 

More reading

• Fund managers have been selling these ASX shares
• What experts are saying about JB Hi-Fi’s profit results as the stock surges to record
• These 3 ASX stocks just got upgraded by top brokers to “buy” today
• ASX 200 down 0.85%: JB Hi-Fi impresses, Altium shoots higher, Bendigo and Adelaide Bank sinks
• Why Bendigo and Adelaide Bank, Kogan, NAB, & Treasury Wine are dropping lower

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking to buy some blue chip ASX shares for your portfolio this week? If you are, then I would suggest you look at the ones listed below.

I believe all three have the potential to generate solid returns for investors over the next decade. Here’s why I would buy these ASX blue chip shares today:

CSL Limited (ASX: CSL)

The first blue chip ASX share to consider buying is CSL. I think the biotherapeutics giant is the highest quality company on the Australian share market and in a great position to deliver solid earnings growth over the next decade. This is thanks to its world class facilities, leading therapies, and extremely promising research and development pipeline. The latter includes a number of therapies that have the potential to generate billions of dollars in sales over the next decade if successful. In addition to this, with the CSL share price down 19% from its high, now could be an opportune time to invest.

Goodman Group (ASX: GMG)

Another blue chip ASX share I would buy for the long term is Goodman Group. It is an integrated commercial and industrial property group which owns a high quality portfolio of assets. Management notes that its properties are a symbol of smart investment. It has strategically located modern, high quality properties in key gateway cities around the world. This has shortened the distance between business and consumers and put its customers ahead of the market. No wonder the likes of Amazon, DHL, and Walmart are among its tenants.

SEEK Limited (ASX: SEK)

A final blue chip ASX share to consider buying is SEEK. Although FY 2021 looks set to be very difficult because of the pandemic, I believe the job listings giant will bounce back strongly once it passes. And looking long term, I feel it can grow materially in the future thanks largely to its growing Zhaopin business in China. Given how this business has such a massive opportunity in a very lucrative market, I believe it will be the key driver of growth over the next decade. This should be supported by solid growth from its ANZ business, which continues to dominate the local market.

More reading

• The Starpharma share price jumps on new partnership deal
• 2 five-star ASX growth shares to buy in August
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• Why I’d buy today’s CSL share price over Mesoblast
• 2 important investing lessons you might have forgotten

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Hydrix Ltd (ASX: HYD) share price blasted off today (and that’s no exaggeration), gaining more than 253% to trade at 31.5 cents just prior to the market’s close. And this on a day when the All Ordinaries Index (ASX: XAO) is down 0.8%. So what’s driving the Hydrix share price, a small company with a market capitalisation of only $28 million?

Hydrix share price leaps on implantable heart attack warning system

The Hydrix share price took off after the medical product innovation company released an announcement to the ASX today reporting success with the first supply and implant of its AngelMed Guardian device.

AngelMed is the first implantable heart attack warning system to receive approval by the United States Food and Drug Administration (FDA). The company announced that four of its implants were performed in Singapore last week and that all four patients have now been released from hospital.

Hydrix medical field Clinical Engineers supported each implant via real-time remote support from Angel Medical Systems staff in the US.

The latest good news for Hydrix follows the company’s 13 March announcement that it had acquired an exclusive 7-year distribution agreement for AngelMed Guardian spanning eight Asia Pacific countries.

A significant milestone

Addressing the company’s latest success, Gavin Coote, Hydrix Executive Chairman said:

“The AngelMed Guardian implants are a significant milestone for Hydrix and AngelMed. This achievement demonstrates strong execution of our buy, build, invest strategy to create product revenue and earnings streams, and of equal importance, reflects progress in our aspiration to meaningfully improve a billion lives”.

Founder and Chairman of Angel Medical Systems David Fischell added:

“We are very pleased with the success of these first Asia Pacific implants and excited about the large potential market opportunity. It has been a global team effort in getting to this point…”

The implanted devices will gather data over a 2-week period to establish each patient’s baseline heart signal before the device is calibrated and the alarm configuration customised.

AngelMed Guardian uses artificial intelligence and machine learning algorithms to monitor patients’ heart signals to warn of acute coronary syndrome events, including silent heart attacks.

The company estimates 500,000 people annually suffer from an acute coronary syndrome event in the top four Asia Pacific countries it is initially targeting.

With today’s meteoric rise, the Hydrix share price is up 43% year to date.

More reading

• Telstra share price hit by broker downgrade today
• Brainchip share price rockets 30% in a week
• What recession? These ASX retail shares are raking it in
• Buy and hold these fantastic ASX blue chip shares
• Golden opportunity? A big reason why the gold price could surge higher from here

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Gold rush!

Much has been made of a certain metal of the yellow variety in recent times. That’s to be expected when an asset hits an all-time high. Gold caused quite a stir late last month when it surged past its 2011 record high of US$1,921 an ounce.

After racing as high as US$2,075, the gold price has now settled back around US$1,950, where it has hovered for the past week or so. Other precious metals like platinum and silver (in particular) have also been shooting higher in recent weeks. So with upward momentum seemingly stalling for now, where to next for ASX gold bugs?

Why has the gold price hit the roof?

Gold is traditionally a ‘risk-off’ investment asset, which means investors usually flock to it when there are concerns over the immediate future of ‘risk-on’ investments like ASX shares.

So it is somewhat confusing to see gold hit record highs when global sharemarkets are concurrently rising. My reading on this phenomenon is that investors are not too bullish on the medium-to-long-term outlook for the share market in light of the coronavirus pandemic. Add to this concerns over future inflation stemming from the truckloads of central bank cash injections into the global financial system and we have a perfectly mixed cocktail for a rising gold price.

Can the gold price go higher?

Now that gold has reached past its 2011 peaks (and is up nearly 30% in 2020 so far), I’m sure most of you are wondering whether gold can really climb higher from here.

Well, there is one commentator that answers a resounding ‘yes’ to this question. Reporting from precious metals news site Kitco.com points out that, although the gold price has hit new all-time highs, it still remains well-below it’s an inflation-adjusted all-time high. In fact, when you include the effects of inflation, gold has yet to even break it’s 2011 high. Let alone the inflation-adjusted record that was set way back in 1980.

Kitco tells us that it’s inflation-adjusted 2011 high is worth a price of US$2,149.69 an ounce today — a level not yet tested in 2020.

And if gold were at the same level today as 1980, adjusting for inflation, it would be commanding a price of US$2,722.18 an ounce. That’s another 40% on top of the current gold price.

For silver, the potential is even better. Today, one ounce of silver will set an investor back US$26.80 an ounce. If silver was to re-test the 1980 inflation-adjusted peak, it would need to be trading at US$160.59 an ounce.

Foolish takeaway

Just because gold (or silver) prices could go higher from here doesn’t necessarily mean they will. But personally, I am bullish on the medium-term outlook for precious metals, mostly due to the factors listed above. I think monetary debasement will come at a cost, and this cost could indeed see precious metal prices push higher in the years ahead. If you agree, you might want to invest with this in mind.

More reading

• Telstra share price hit by broker downgrade today
• Brainchip share price rockets 30% in a week
• What recession? These ASX retail shares are raking it in
• Buy and hold these fantastic ASX blue chip shares
• Hydrix share price rockets 250% following announcement

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Cochlear Limited (ASX: COH) share price is edging lower on Monday afternoon following the release of an update on its patent infringement case.

At the time of writing the hearing solutions company’s shares are down just over 0.5% to $199.05.

What was in Cochlear’s update?

This afternoon Cochlear announced that it has settled the claims for pre-judgement interest and attorney fees by the Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB).

According to the release, the parties have settled the claims for US$75 million. This is a small win for Cochlear given that AMF and AB were previously seeking pre-judgement interest of US$123 million and attorney fees of $15 million.

Though, this still remains conditional upon the outcome of an appeal by Cochlear to the United States Supreme Court. It is appealing against the judgement of US$280 million in patent infringement damages and post judgement interest against Cochlear and its US subsidiary Cochlear Americas.

What’s next?

Cochlear has agreed to file its appeal in the Supreme Court by no later than 15 September 2020.

In the meantime, it has agreed to deposit US$75 million into an escrow account pending the outcome of the appeal.

If Cochlear’s Supreme Court appeal is unsuccessful, the monies in the escrow account will be paid to AMF and AB and the settlement will become final.

However, if Cochlear’s Supreme Court appeal is successful, the monies in the escrow account will be returned to Cochlear and there may be a new trial to redetermine the quantum of damages.

In accordance with accounting standards, a provision for the settlement liability and associated legal expenses will be recognised in Cochlear’s upcoming FY 2020 financial results.

Cochlear is scheduled to release its results on Tuesday morning before holding an analyst call at 10am Eastern time.

More reading

• Why Aurizon, Cochlear, Magellan, & Westpac shares are pushing higher
• Top brokers name 3 ASX shares to sell next week
• 3 outstanding ASX shares to buy in August
• Top brokers name 3 ASX shares to sell today
• 3 top ASX shares that could be quality buy and hold options

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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