UPDATE 2-Qualcomm buys AMD assets for $65 mln

(Adds analyst and executive comment, share price update)

NEW YORK Jan 20 (Reuters) - Qualcomm Inc (QCOM.O) said on Tuesday it bought the handheld technology assets of computer chip maker Advanced Micro Devices (AMD.N) for $65 million to expand its graphics and multimedia offerings.

Qualcomm, which already leads the market for cell phone chips, said the cash deal would cut proforma earnings per share by about 2 cents for its fiscal year 2009 before adding to earnings by the second half of calendar-year 2010.

AMD, which announced plans in July to divest the handset technology business, said that sale would allow it to focus on its core businesses of computer processors and graphics chips.

Stifel Nicolaus analyst Cody Acree estimated that the AMD business could bring in revenue of about $20 million a quarter for Qualcomm, which analysts expect to report revenue of $2.4 billion for its fiscal first quarter ended in December.

Under the terms of their agreement Qualcomm said it offered jobs to design and development teams from AMD's handheld business who are working on mobile device technologies in areas including 2D and 3D graphics, audio, video and display.

The companies said they closed a binding agreement on Jan. 19 after having received regulatory approval.

Qualcomm said the $65 million cash price tag for the deal is subject to adjustments for employee-related expenses and a holdback for certain indemnification obligations.

Qualcomm Chief Executive Paul Jacobs said late on Tuesday that "business continued to be strong" and that he expected handset shipments to increase 25 percent this year from 2008.

The executive was referring to phones based on CDMA, a wireless technology it developed, and WCDMA, a high-speed mobile standard that many operators around the world have used to upgrade their networks for wireless Web surfing.

In comparison leading phone maker Nokia (NOK1V.HE) has said it expects the entire handset market to fall at least 5 percent next year, including older phones based on the GSM technology standard and not included in Qualcomm's estimate.

Qualcomm shares rose as much as 61 cents to $34.75 in late trade after closing down 5 percent at $34.14 from the regular Nasdaq session on a day that the Philadelphia Stock Exchange Semiconductor Index .SOXX closed down 7 percent.

AMD, which said Friday that it would cut 1,100 jobs and take a $622 million charge related to a previous acquisition, saw its shares close down 29 cents or almost 13 percent at $2 on New York Stock Exchange. (Reporting by Sinead Carew; Editing by Steve Orlofsky and Matthew Lewis)