Zscaler - Dismissal of lawsuits

This may have had something to do with the run-up yesterday. I had forgotten that they were even being sued.

Saul

* ZSCALER ANNOUNCES DISMISSAL OF LAWSUITS

* ZSCALER - DISMISSAL WITH PREJUDICE OF ALL PATENT LAWSUITS FILED BY SYMANTEC AGAINST ZSCALER

* ZSCALER - WILL MAKE PAYMENT OF $15 MILLION TO BROADCOM, AND BROADCOM PROVIDES ZSCALER WITH PATENT LICENSE, RELEASE, AND COVENANT NOT TO SUE

* ZSCALER - OTHER TERMS OF SETTLEMENT ARE CONFIDENTIAL

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In the formal legal world, a court case that is dismissed with prejudice means that it is dismissed permanently. A case dismissed with prejudice is over and done with, once and for all, and can’t be brought back to court.

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Yes, the lawsuit is settled. The key issues here, and it will have to be disclosed is whether or not $15 million is the totality of the payout by Zscaler, how much the annual license will cost (is it from the one time $15 million payment), and what are the “other terms of settlement” that is confidential.

Almost all lawsuits settle before trial. If it is just $15 million then a grand victory for Zscaler, but what is the annual cost moving forward? Without a lawsuit I would imagine not much as Zscaler would not have settled for onerous terms in a matter like this.

Tinker

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Hi Tinker, yes $15 million just seems like a slap on the wrist for Zscaler, and a symbolic meaningless victory for a big company like Broadcom.
Saul

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Perhaps Broadcom, which is now a full-blown mega-conglomerate like GE, felt like they had more important things to do to incorporate Symantec’s portfolio into their fold than litigating such a “small” (monetary-wise, if $15M was enough to make it go away) issue. CA Technologies, LSI, Brocade, Emulex… those entities are all gone now and part of AVGO.

As an aside, I’m still completely befuddled on what Symantec adds to Broadcom’s strategy or bottom line since SYMC itself has been acquiring and killing products left and right itself, but whatever.

This may have had something to do with the run-up yesterday. I had forgotten that they were even being sued.

I think this is worth figuring out for anyone still with an interest in ZS. The price action could be explained by this, alternatively there has been a rising tide effect following the recent period of P/S compression.

One other aspect of ZS that has me intrigued is uncovering the amount of revenues associated with DELL and its distribution that have been hit by Dell’s acquisition of Carbon Black and to what degree this is accounting for the recent slowdown and to what degree growth might re-accelerate once the YoY compares are out of the way (2020 Q3 I believe).

Did anyone ever come across what ZS’s exposure to Dell was? I couldn’t find anything in the customer concentration risk or any ERs.

Ant

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