Qualcomm Deal Still Elusive by Mark Veverka
Summary: Qualcomm (QCOM) shares are up 17% in February, primarily due to the steady flow of rumors that it is close to renewing its licensing pact with Nokia (NOK) -- the present agreement dies April 9. But if we're to believe Qualcomm CEO Paul Jacobs (and why shouldn't we?), the two parties are "pretty much at deadlock," while Nokia VP Bill Plummer says only "negotiations are ongoing." Nokia wants to pay Qualcomm lower fees in order to use its W-CDMA (wideband code-division multiple access) technology (W-CDMA is the third-gen successor to GSM, widely used in Europe), and it also wants Qualcomm to pay it royalties for certain patents owned by Nokia. Any reduction in licensing fees would be serious for Qualcomm, which makes most of its money from licensing. Nokia's stance implies it feels it has a wide array of W-CDMA patents, and is willing to take on Qualcomm in an intellectual-property court fight. Charter Equity's Ed Snyder says there will not be a deal, and QCOM is destined to fall, seeing as its core business is flailing. Last week Jacobs told investors that Qualcomm's agreement to provide MediaFlo mobile-video technology to AT&T's (T) Cingular wireless might bring Nokia closer (because Nokia would need to buy Qualcomm's MediaFlo chips to make videophones for Cingular) -- but author Mark Veverka says he may have been grasping at straws.