Hytera Discloses Major Litigation Development: Ordered to Pay $50 Million to the U.S. Government, Company Operations Normal

Hytera (SZ002583, stock price 10.97 RMB, market value 20 billion RMB) has announced the latest development in a major lawsuit.

On March 12, Hytera announced that in January this year, the company reached an agreement with the U.S. Department of Justice (DOJ, hereinafter referred to as DOJ case), which was approved by the U.S. District Court in Illinois. Under the agreement, the company is required to pay the U.S. Department of Justice between $0 and $60 million, and pay certain compensation to MOTOROLA SOLUTIONS INC. and Motorola Malaysia (hereinafter collectively referred to as Motorola).

Recently, the U.S. District Court in Illinois issued a ruling that the company should pay $50 million to the U.S. government and $0 to Motorola. The relevant judgment amount is to be paid after the civil judgment in the trade secret copyright case is fulfilled, and no later than the end of 2029.

Regarding the impact of this lawsuit, Hytera stated that the company has made a provision of $60 million in its 2024 annual report based on the upper limit of the previously agreed amount with DOJ. After this judgment, the company will handle the accounting in accordance with enterprise accounting standards. This judgment-related accounting treatment will not lead to any adjustments to the company’s performance forecast for 2025.

At the same time, the company said it will continue to take necessary legal measures to protect its legitimate rights and interests to the greatest extent. Currently, the company’s production and operations are normal, and this judgment will not have a significant impact on the company’s current business and normal operations.

Currently, the compensation amount involved in this case is a first-instance judgment, and the final outcome of the case remains uncertain. Hytera stated that it will continue to monitor the progress of the lawsuit and fulfill its disclosure obligations in a timely manner through interim or periodic reports.

Public information shows that Hytera is a leading global provider of specialized communication equipment and solutions, capable of providing broadband trunking, public-private integration, emergency communication, satellite communication, and other specialized communication devices and multimodal fusion communication capabilities. It is also known in the industry as the “Little Huawei” in the private network communication field. For a long time, the company has been involved in a series of patent infringement, trade secret, and copyright infringement lawsuits with its main competitor Motorola in the U.S., Germany, Australia, and other regions.

In terms of performance, at the end of January this year, Hytera released its 2025 performance forecast, estimating that the company will achieve operating revenue between 5.8 billion and 6.2 billion RMB in 2025, compared to 6.142 billion RMB in the same period last year; net profit attributable to the parent is expected to loss between 190 million and 290 million RMB, compared to a loss of 3.485 billion RMB last year; net profit excluding non-recurring gains and losses is expected to be between 250 million and 350 million RMB, a year-on-year increase of 27.13% to 77.98%.

Regarding the main reason for the growth in net profit excluding non-recurring gains and losses but a loss in net profit attributable to the parent, Hytera explained that the company has made a provision of about $110 million for the first-instance judgment result of the licensing fee for the H series DMR products. Excluding this factor, the company’s net profit has achieved significant growth. “The company does not agree with the first-instance judgment of the U.S. court regarding the licensing fee for the H series DMR products and has filed an appeal. Meanwhile, the company continues to increase investment in R&D to promote the development and implementation of new generation proprietary communication technology standards and products for private networks.”

(Source: Daily Economic News)