Nokia signs royalty deal with Qualcomm

Nokia and Qualcomm announced a deal to expand their existing CDMA subscriber cross-license agreement to include all versions of CDMA standards such as W-CDMA.

Nokia is one of the last major vendors to expand its licensing agreement with Qualcomm to include W-CDMA technology. Under the new deal, Nokia has the right to sell infrastructure for all CDMA systems, while Qualcomm is granted rights under Nokia’s patents to sell CDMA components, including multi-mode integrated circuits essential for multimode GSM/CDMA chipsets.

Qualcomm’s stock increased more than 10% on Tuesday to close at $63.87. Peter Friedland, analyst with WR Hambrecht, said the deal was a milestone event for Qualcomm because it solidifies the company’s position to receive W-CDMA royalty revenues going forward. W-CDMA is poised to become the dominant third-generation technology worldwide.

“Since Nokia has a dominant 35% share of the global handset market and will be a major player in the rollout of W-CDMA, we believe Nokia’s agreement to pay the same royalty rates on W-CDMA handsets as on 2G CDMA handsets solidifies Qualcomm’s W-CDMA royalty position,” wrote Friedland.

Friedland estimates the agreement could generate about $15 million in licensing revenue beginning in the fourth quarter.