|Nokia Eyes American Advantage After Qualcomm Deal|
Lionel Laurent, 07.24.08, 9:00 AM ET
Finnish handset-maker Nokia and American chip manufacturer Qualcomm have made the surprise decision to kiss and make up, throwing their court cases out of the window in favor of a new agreement over royalties. With Nokia struggling to dominate the American cellphone market, this could be just the shot in the arm that the Finnish company needs.
"The agreement will help to overcome some of the issues Nokia has got in North America, where they've struggled to make headway," said Ben Wood, analyst with research firm CCS Insight. He told Forbes.com that the settlement with Qualcomm could lead to better relationships and negotiations with American network operators, such as Sprint Nextel and Verizon.
Shares in Nokia gained 1.7%, to 17.24 euros ($27.03), during morning trading in Helsinki on Thursday. Qualcomm shares, meanwhile, soared 18.7%, in pre-market trading in New York, a sign that the stakes were high for the company given Nokia's dominant position in the global handset market.
Nokia said Thursday that it had hammered out a new, 15-year agreement with Qualcomm, covering various technologies including third-generation (3G) wireless standards and--significantly--"future generation technologies." This means that as the mobile industry approaches faster data transmission speeds, there is a chance this agreement will help keep divergence in standards to a minimum.
The financial details of the agreement were not disclosed, but Nokia said it would include an up-front payment and ongoing royalties payable to Qualcomm. However, the Finnish handset-maker said that payments per phone would fall, a piece of news that might spur rivals like Motorola or Samsung to re-negotiate their own royalty agreements.
Spokespeople for Qualcomm and Nokia were unavailable for comment on Thursday. The litigation war had seen rulings in favor of Nokia begin to mount up, as judges ruled that Qualcomm's patents had not been infringed.
Although the new agreement has ended all outstanding cases between the two companies, there was no mention of how an ongoing European Commission complaint against Qualcomm would turn out. In 2005, six companies including Nokia, Broadcom, Ericsson and Texas Instruments claimed that Qualcomm was behaving in an anti-competitive way when licensing mobile patents. (See "Qualcomm Licked In Legal Battle")