Monday September 25 11:36 AM ET
COM DEV to License QUALCOMM Technology
TORONTO (Reuters) - Wireless infrastructure firm COM DEV International Ltd.(Toronto:CDV.TO - news) said on Monday it would license QUALCOMM Inc. (NasdaqNM:QCOM - news) technology for use in its high-speed Internet system and that as part of the deal QUALCOMM had purchased a block of its shares.
Ron Holdway, COM DEV's vice-president, investor relations, said QUALCOMM had agreed to buy ``less than 1 percent'' of the company's shares on a fully diluted basis, which translates into a ``sizable amount of money.''
The agreement calls for Cambridge, Ontario-based COM DEV to pay licensing fees and royalties to QUALCOMM for its High Data Rate (HDR) Technology and modem cards. The amounts of the fees and royalties were not disclosed.
``From QUALCOMM's point of view, the size of the deal depends on how much we sell,'' Holdway said.
Holdway said the global market for COM DEV's wireless Internet product is estimated at about $300 billion over five years, which is ``far beyond'' COM DEV's current resources to handle alone.
``Our success was largely contingent on our ability to sign up partners able to manage those kinds of markets. QUALCOMM is the first. There will be more announcements coming over the next few weeks,'' Holdway added.
The news pushed COM DEV's stock up 21 percent at the opening of trading on the Toronto Stock Exchange to a year high of C$13.80. At mid-morning, the shares were up C$1.80 at C$12.75.
QUALCOMM's shares were up $1-1/2 at $74-1/2 on Nasdaq in mid-morning trading.
QUALCOMM, of San Diego, California, will transfer to COM DEV infrastructure designs for its High Data Rate technology so that COM DEV can use the technology in its wireless base stations and mobile modem cards.
COM DEV is working on a wireless Internet system for mobile computing that will enable Web surfing while the user is traveling at speeds of up to 120 miles per hour.
Earlier this month COM DEV moved its wireless headquarters to a Dallas suburb to be closer to its biggest customers, Nortel Networks and Nokia.
As part of the arrangement, QUALCOMM said it would make an equity investment in COM DEV.
``Our discussions led to a decision to make an equity investment in the company to encourage and foster the expansion of innovative CDMA (news - web sites) (code division multiple access) and HDR (High Data Rate) applications,'' said Marvin Blecker, QUALCOMM's senior vice-president of technology transfer, in a statement.
COM DEV's market capitalization is about C$585 million ($392 million) based on 45 million fully diluted shares outstanding.
``If they are willing to make an equity investment it sounds like a longer-term relationship,'' said Peter Notidis, analyst at Harris Partners in Toronto.
``Given that they have taken an equity stake in them, it suggests that they're a lot more interested in this than the passing use of their technology,'' Notidis added.
COM DEV's high-speed wireless Internet system will be a viable wireless alternative to current high-speed Internet access systems, including cable and digital subscriber lines, said Keith Ainsworth, COM DEV's chief executive in a statement.
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