Nokia Will Pay Qualcomm Royalties for Web Phones
Nokia Corp., the world’s largest mobile-phone maker, agreed to pay Qualcomm Inc. royalties on sales of new phones that offer high-speed Web access, ending Nokia’s status as the biggest holdout against such an agreement.
With the accord, Qualcomm will get royalties on Nokia-made phones that use a new version of Qualcomm’s patented code-division multiple-access, or CDMA, technology. Nokia is promoting the new standard, which probably will become widespread in Europe, Japan and parts of the U.S. within a decade. It offers fast Internet access and may have features such as videoconferencing.
Nokia will pay the same undisclosed royalty rate as it did before on all types of CDMA equipment, calming investor fears that Nokia might pay lower fees. San Diego-based Qualcomm makes chips and licenses patents for CDMA phones, which are used by 90 million people worldwide.
Qualcomm rose $6 on Tuesday to $63.87 on Nasdaq. Nokia’s American depositary receipts fell 20 cents to $22.20 on the New York Stock Exchange.
The deal moves Qualcomm a step closer to getting a cut of every mobile phone that’s sold, one of the main reasons that 24 out of 28 analysts recommend the stock, according to Bloomberg data. Though the shares have dropped this year on weaker-than-expected phone sales, the decline is less than the 54% slide in the Standard & Poor’s communication-equipment manufacturers index.
Wireless networks using Qualcomm’s older CDMA technology have been operating mainly in the U.S. and South Korea. Wireless-service providers in Europe, China, Japan and other areas using rival standards, mainly global system for mobile communications, or GSM, have said they will install network equipment based on WCDMA technology developed by Nokia and Ericsson.
Qualcomm has said WCDMA uses the same patented technology as its CDMA, so any equipment and phone makers would have to pay the same royalties. Qualcomm is promoting its rival CDMA2000 technology as an easier upgrade from the old CDMA standard.
The Nokia agreement, signed Monday, also averts a potential legal dispute between the companies. Qualcomm has settled previous patent lawsuits with Motorola Inc. and Ericsson, the world’s No. 2 and No. 4 mobile-phone makers, respectively.
Nokia spokeswoman Megan Matthews declined to comment on terms of the agreement. Finland-based Nokia gave Qualcomm rights to sell components that use Nokia patents based on CDMA. Qualcomm is developing chips for phones that run on multiple standards including GSM, CDMA2000 and WCDMA.
Nokia gets the right to make and sell wireless-network equipment for all types of CDMA. It’s an expansion of the original agreement that the companies signed in 1992.
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Share Price Plateau?
Qualcomm got a boost Tuesday from a royalty agreement with Nokia, rising more than 10% to $63.87 on Nasdaq. The shares still are down 22% this year and are little changed from a year ago.
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Qualcomm shares, monthly closes and latest on Nasdaq
Tuesday: $63.87, up $6.00
Source: Bloomberg News
