The U.S. International Trade Commission [ITC] voted Thursday to partially ban imported cell phones installed with chips made or designed by QUALCOMM, related to an ongoing patent dispute with rival Broadcom. QUALCOMM said it plans to seek a stay and presidential veto. The ban applies to phones made after June 7 and does not apply to those already on the market. Ahead of the ITC's ruling, shares of QUALCOMM fell 2.87% to $41.02 in normal trading, but last traded up 1.68% to $41.71 in after-hours activity on volume just shy of 5.1 million. Broadcom lost 2.24% to $30.11, but added 1.12% to $30.45 in extended trading on volume of 317,000. Wireless carriers, including Verizon, which said it will also seek a veto and immediate stay, told the ITC in March that a total ban of phone imports with QUALCOMM chips would cost them billions of dollars in investments and profits. While Broadcom said in a statement it is willing to negotiate a licensing agreement with QUALCOMM, the latter's general counsel said such talks are "impossible" because the compensation terms Broadcom wants "would be destructive to our business model."
Sources: Press releases [I, II], Bloomberg, MarketWatch, The Wall Street Journal
Commentary: Nokia's Qualcomm Smear Campaign Won't Work • Nokia Readies for China's 3G Rollout • QUALCOMM: Profit and Sales Up Double-digits, Raises Guidance, Shares Higher
Stocks/ETFs to watch: QUALCOMM (QCOM), Broadcom (BRCM).
Competitors: Nokia (NOK), Samsung Electronics [not traded in U.S.; see iShares S. Korea (EWY)], Texas Instruments (TXN). Wireless carriers: Verizon (VZ), Vodafone (VOD), AT&T (T), Sprint Nextel (S), [T-Mobile] Deutsche Telekom AG (DT). ETFs: Broadband HOLDRs (BDH), Wireless HOLDRs (WMH), iShares Goldman Sachs Networking (IGN)
Conference call transcripts: QUALCOMM F2Q07, Broadcom Q1 2007, Verizon Q1 2007
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