Qualcomm said on Wednesday that it will be hurt in the short term by a court injunction on the sale of chips infringing on rival Broadcom, but it promised to have alternative products in phones before the end of the quarter.
On Monday, federal judge James V. Selna handed down a decision that bars 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. While Qualcomm indicated it will appeal, Broadcom indicated it will continue to hold Qualcomm’s feet to the fire in the additional intellectual property litigation it is pursuing.
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. Analyst Blair Levin says the ban on Qualcomm video compression chips would impact AT&T Mobility.
Qualcomm said it is still examining the impact of the ruling for U.S. customers, which also include Sprint and Verizon Wireless. The ruling provides a stay until the end of January 2009 on the ban for some Qualcomm chips supporting EV-DO, a high speed wireless service used by Sprint and Verizon Wireless, and QChat, a walkie-talkie style service. QChat was key to Sprint’s plan to migrate Nextel iDen users to CDMA push-to-talk.
Sprint Nextel had been counting on a first-quarter launch of QChat to help revive its cellular service, which has suffered from customer defections. Sprint spokesman Matthew Sullivan said the company does not see any delay to its QChat service from the ruling as it believes that its handset providers are covered by the stay.
Qualcomm is also in arbitration proceedings with Nokia as the companies failed to renew a technology license agreement that expired in April 2007. Cowen & Co analyst Matthew 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 technology used by AT&T.
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