Why Apple is in no hurry to settle its iPhone patent suits

New analysis suggests the payoff could be seven fold greater if it holds out for a win

In a note to clients issued Monday, Deutsche Bank's Chris Whitmore lists four possible outcomes of the patent wars being fought in courts around the world between Apple (aapl) and the Google (goog) Android ecosystem:

1) settlement with per unit license fee paid to Apple;
2) a more favorable outcome where Apple handicaps Android’s feature set and/or distribution and captures 25% of Android’s future market share;
3) neutral with no winner; and
4) Apple loses and must pay a counter claim

Whitmore must not consider outcomes 3 and 4 very likely because he spends the rest of the note trying to calculate the value to Apple shareholders of outcomes 1 and 2.

Outcome 1 -- a settlement where Apple licenses its intellectual property for about $10 per Android device sold --could add, according to Whitmore's calculations, roughly $35 to Apple's share price.

Outcome 2 -- where Android's feature set or ability to distribute is diminished -- is considerably less likely, but the payoff could be enormous. If Apple were to capture 25% of the future anticipated Android market, for example, Whitmore estimates that Apple's share price could grow by roughly $260 per share.

"As a result," he concludes, "we suspect Apple is unlikely to settle cheaply."

Apple investors, meanwhile, should sit tight, according to Whitmore. They are "gaining exposure to a potentially very lucrative favorable IP outcome for little or no cost."

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