Thursday, July 24, 2008

Qualcomm's Mobile Star Rises, While AT&T's Landlines Continue to Fall

Qualcomm -- based here in my backyard in San Diego -- just agreed to end its epic patent infringement battle with Nokia. Under a 15 year agreement reached by the parties, Nokia will make a massive up-front payment to Qualcomm (speculated to be in the hundreds of millions of dollars), as well as ongoing royalty payments (Nokia is said to have paid more than $1 billion in royalty payments to Qualcomm since the early 1990s). Qualcomm, according to The Wall Street Journal, makes more than 50% of its profit from licensing its patents. Very very good indeed for Qualcomm (the Street obviously agreed, with shares rocketing up 18% in after-hours trading).

Next, AT&T -- not as good news here, to say the least. Consumers are dropping traditional land lines at an accelerated and unexpected pace (and AT&T gets 32% of its revenue from its land line business). The mobile phone, of course, is increasingly the "one size fits all" for consumers around the world. And Qualcomm is reaping the rewards of that reality -- enabling ever richer services to consumers around the world with its more powerful chip sets.