JupiterResearch: ANTI-QUALCOMM MANEUVERS DECODED

Sharon Armbrust at JupiterResearch writes about the legal battles between Qualcomm (QCOM) and Nokia (NOK), Ericsson (ERICY), Broadcom (BRCM) aimed at forcing Qualcomm "to reduce its licensing fees." She quotes the following from Qualcomm's recent earning call:

...publicly available sources can be used for one objective measure of the value of essential patents in the WCDMA standard by examining how often patents essential to the WCDMA standard were cited as prior art in the patents of other inventors.

Looking at citations is a measure of significance somewhat analogous to the way Google ranks Web pages by examining the number of links to that page. When you factor out citations by a company of its own patents, QUALCOMM has 47% of the citation-weighted portfolio of essential patents for WCDMA, followed by Ericsson at 21%. Significantly, Nokia has only 3%, NEC 2%, Panasonic 1%, and TI and Broadcom have less than 1%.

She concludes that:

The as yet unsigned license renewal agreement between Qualcomm and Nokia, due to expire April, 2007, has hung heavily over QCOM shares (off 34% from end April thr. 7/21), compounded by Nokia’s announcement it will stop producing some CDMA phones and some emerging market carriers’ jawboning they will use more 2G GSM in their networks short-term to avoid CDMA patent costs.

In the end, however, there is not going to be a way for Nokia or the carriers to get around Qualcomm patents. All players will all upgrade to 3G eventually, where Qualcomm CDMA and HSDPA patents are pervasive—all of which makes QCOM shares look oversold.