Qualcomm says Broadcom ruling to hurt short-term

By Sinead Carew and Franklin Paul

NEW YORK (Reuters) - Wireless chip supplier Qualcomm Inc (QCOM.O: Quote, Profile, Research, Stock Buzz) said on Wednesday it would be hurt in the short term by a court injunction on the sale of chips infringing rival Broadcom Corp's (BRCM.O: Quote, Profile, Research, Stock Buzz) patents, but it promised to have alternative products in phones before the end of the quarter.

Broadcom shares rose as much as 5 percent after the news and Qualcomm shares fell 1.7 percent, but the trading reflected by some investor relief that Qualcomm appeared to have a technology workaround.

A federal judge in California on Monday barred Qualcomm from selling products infringing three Broadcom patents in the United States, but said it could sell some chips using the patents through the end of January 2009 if it paid royalties.

The judge also issued an immediate injunction on Qualcomm chips based on WCDMA, a high-speed wireless technology, that were found to infringe Broadcom's video encoding patent.

Qualcomm, which is also embroiled in legal battles with leading phone maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), said it was looking at legal options such as an appeal and promised to have new WCDMA chips in U.S. phones before the end of March.

Analysts said the short-term impact of the ruling did not appear to be severe.

"The injunction is probably a bit wider than anticipated, but that is offset by faster availability of workaround chips than expected," said Cowen & Co analyst Matthew Hoffman.

Hoffman estimates that about 30 percent of Qualcomm's total revenue is generated in the United States, with only a small portion of U.S. revenue coming from WCDMA, a wireless high-speed Internet technology used by No. 1 U.S. mobile service AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz).