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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: SKIP PAUL who wrote (25149)	3/26/1999 6:58:00 AM
From: SKIP PAUL	Respond to of 152472

New york Times Article: To see related picture click on link below: search.nytimes.com March 26, 1999 Ericsson and Qualcomm Settle Dispute By BLOOMBERG NEWS TOCKHOLM -- Ericsson A.B., the world's No. 3 mobile telephone maker, and Qualcomm Inc., a United States rival, agreed Thursday to share access to each other's technology in a market that is expected to add 700 million cellular phone users over the next five years. Ending a two-year patent dispute, Ericsson will buy a Qualcomm unit that makes cellular equipment based on the code division multiple access technology, which will be the basis for future broadband technology that lets users get real-time news and hold video conferences on the go. Qualcomm will receive royalties and access to some of Ericsson's patents on phone technology. This means that "a great element of insecurity disappears when it comes to introducing the third generation of wireless communications," said Christian Hall, chief analyst at Den Norske Bank in Stockholm. "The deal creates possibilities for Ericsson to enter all the different technologies." Today's narrowband technology, used by 300 million cellular phone users, was made mainly to transmit voice. Ericsson does not make products for code division narrowband technology, partly because of the patent dispute. The standard is used in the United States and may soon be used in China, while the technology Ericsson sells is used in Europe, Asia and the United States. Shares of both companies surged. Ericsson rose 12.5 kronor, or 7.1 percent, to 188 in Stockholm after falling 7.6 percent on Wednesday when the company said its first-quarter profit would fall. Qualcomm jumped $11.0625, or 12.7 percent, to $98.4375 in New York. Qualcomm will take an unspecified charge related to the sale. The companies would not give details on the unit Ericsson is buying, which covers about a tenth of Qualcomm's employees. Qualcomm plans to announce details of its charge and the agreement when it releases its next quarterly report. It recently cut jobs at the unit it is selling to Ericsson in an attempt to make it profitable. Qualcomm said last month that it expected the unit to break even in the quarter that ends Sept. 30 on annual sales of $600 million to $700 million. Ericsson, based in Stockholm, forecasts that 15 percent of the one billion mobile phone users expected in five years will be linked to networks based on narrowband code division technology or the future broadband technology. It will start selling phones with the code division technology next year. While Europe has one standard, known as the global system for mobile communication, the United States has three. The global system is based on time division multiple access technology, a rival technology to code division on the narrowband market. That has made it harder for the United States to back one single standard for the next technology, due in 2001, while the European Union and Japan have already chosen the broadband code division technology, which is backed by Ericsson and its Finnish rival, Nokia.