Nokia Settles With Qualcomm For $2.3 Billion In Patent Agreement

Finland’s handset maker and leading mobile phone supplier Nokia (NYSE:NOK), after reporting Thursday its Q3′08 results - gave confirmation that will pay a lump-sum payment of 1.7 billion Euros ($2.3 billion) to Qualcomm Inc. (NASDAQ:QCOM) as part of the patent agreement between the companies.

The newly confirmed deal covers various current and future standards and other technologies, thus resulting in a settlement of ‘all litigation’ between the two rivals.

Under the terms of the 15 year agreement which effectively ends over three years of dispute between Nokia and Qualcomm, the Finish co. has been granted a license under all Qualcomm’s patents for use in Nokia’s mobile devices and Nokia Siemens Networks infrastructure equipment. In other words, Nokia is paying a settlement in order of being able to utilize Qualcomm intellectual property.

“As a result of the agreement with Qualcomm and certain other license agreements concluded during the third quarter 2008, Nokia incurred a slightly positive impact to its gross margin during the quarter, as the royalty provisions earlier recorded well covered the related obligations” - Nokia said in its earnings release.

The 1.7 billion euros ($2.3 billion) amount is payable during the fourth quarter of the current year.

By coming to a resolution that benefits both sides, the news can certainly be described as a positive development for the cellular industry.

Nokia disappointed today with its third-quarter earnings. Its net income fell nearly 30% from last year. Earnings for the quarter came in at 29 euros a share, falling from a profit of 40 euros a share in the year-ago period.

Handset maker’s net sales were 12.2 billion euros, down 5% year on year and down 7% sequentially. Devices & Services net sales posted 8.6 billion euros, down 7% year on year and down 5% sequentially.

On the positive side, Nokia said adjusted gross margin increased to 35.7% from 34.5% a year earlier. In the third quarter ‘08, the total mobile device volume of Nokia’s Devices & Services group reached 117.8 million units, representing 5.5% year on year growth and a 3% sequential decrease.

Nokia said it expects industry mobile device volumes in the fourth quarter 2008 to be approx. 1.26 billion, up from 1.14 billion units it estimated for 2007.

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