Mark Roberts (Everen/First Union) comments about QCOM/NOK deal>
Qualcomm-Nokia royalty deal could be closer, analyst says
March 13, 2000
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By Mike Mason, Bridge News
San Francisco--Mar 10--First Union Securities analyst Mark Roberts said that shares of Qualcomm moved higher Friday after comments coming out of a Nokia analysts' conference in San Francisco. Roberts, who was attended the meeting, said that a subtle shift in Nokia's position on next-generation CDMA platforms could signal that it might sign a CDMA2000 licensing deal with Qualcomm.
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"Nokia has said in the past that they are going to be very aggressive with WCDMA third-generation handsets," Roberts said. Nokia has held the position that they might not have to pay royalties to Qualcomm for that version of CDMA. Both WCDMA and CDMA2000 are platforms for third-generation handsets.
"Today, Nokia said that they would be strategically aggressive in current CDMA and also in CDMA2000." Qualcomm's claim for royalties on CDMA2000 are more clear-cut.
Shares of Qualcomm were flat until about 1430 ET Friday, when they started rising quickly, hitting a peak of about 145 « before 1530 ET. The shares started moving as analysts stepped out of the Nokia briefing. Shares of Qualcomm closed 7.2% higher at 136 1/8.
"It's a subtle shift (on Nokia's part)," Roberts continued, "but has implications in that Nokia will have to have a 3G license from Qualcomm."
Qualcomm commercialized the CDMA, or code division multiple access, wireless platform in the 1980s, and holds numerous patents that earns the San Diego-based company a significant royalty stream.
But Nokia has held to the position that it doesn't have to pay royalties on WCDMA, a third-generation (3G) platform that will allow handsets to handle robust data applications. The 3G platform is not expected to be widely available for 2 years.
"Nokia's comments today decrease the risk profile of Qualcomm stock a little bit," Roberts said, because they signal a move to support for CDMA2000.
Roberts also said that he believes Nokia and Qualcomm could sign a chip deal, which would be much more important to Qualcomm than a licensing deal.
"Despite Nokia saying 'No' to a chip deal over and over again," he said, "CDMA is the fastest-growing technology in the world. Nokia has failed to make any significant inroads in any CDMA market because it's had problems with its software and chipsets."
If Nokia wants a 25% market share of the worldwide handset market, they will have to go to the Qualcomm chipset, Roberts said.
Nokia, which has about 500 people at a research and development facility in San Diego, across from Qualcomm's headquarters, has publicly maintained that it will develop its own chipset.
"They may go to Qualcomm and offer to jointly develop a chipset," Roberts said. "That would be the best of both worlds." End
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