Nokia patent deal with Qualcomm boosts both stocks

By Tarmo Virki

HELSINKI (Reuters) - Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), the world's top cellphone maker, has ended three years of legal battles with wireless chip developer Qualcomm (QCOM.O: Quote, Profile, Research, Stock Buzz) and signed a patent agreement that boosted both companies' shares.

Under the 15-year agreement, Finland's Nokia will make an upfront payment to U.S. firm Qualcomm and pay subsequent royalties, but it said payments per phone would fall.

Nokia's net royalty rates for access to Qualcomm's patents will drop under the agreement, Nokia's Chief Financial Officer Rick Simonson told Reuters on Thursday.

On average, Qualcomm charges phone makers close to 5 percent of the price of a handset, though there are small variations between deals.

Shares in Nokia were 2.1 percent higher in Helsinki at 17.31 euros by 1115 GMT, outperforming a flat DJ Stoxx European technology index , while Qualcomm shares were indicated to open up more than 20 percent at $54.19 later in the U.S.

"Nokia negotiated a very good deal, and the others will demand that too," said analyst Helena Nordman-Knutson, from Ohman Fondkommission in Stockholm.

"If there is an agreement where royalty per unit goes down, the others won't agree to stay on their old levels. Potentially it's good for everyone with these kinds of big deals," she said.

Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz), Broadcom (BRCM.O: Quote, Profile, Research, Stock Buzz), NEC (6723.T: Quote, Profile, Research, Stock Buzz), Panasonic (6752.T: Quote, Profile, Research, Stock Buzz) and Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) have all filed complaints with the European Union alleging anti-competitive conduct by Qualcomm, including excessive royalty rates.