Qualcomm (QCOM) Settles Legal Battle With Nokia (NOK), Shares Soar Despite Weak Guidance

A big move for mobile phone chip maker Qualcomm (QCOM): It’s finally settled its extended legal battle with Nokia (NOK), the world’s largest mobile phone maker. WSJ:

The companies didn’t disclose financial details of the settlement. But they described it as a 15-year agreement that includes Nokia making an up-front payment as well as on-going royalties to Qualcomm.

More broadly, the deal suggests that Nokia — the world’s largest maker of mobile phones by volume — could turn from Qualcomm’s biggest adversary into a potential customer for its chips.

The initial payment to Qualcomm is likely to be hundreds of millions of dollars. [Lehman Brothers analyst Timothy] Luke estimates that Nokia would have owed Qualcomm about $600 million in 2008 alone under royalty rates it paid under a prior agreement between the companies.

Qualcomm estimates the Nokia settlement could be worth anywhere between $0.07 and $0.13 per share. Shares are up 20% in premarket trading to $53.78, above the company’s 52-week high. This despite the company announcing weaker-than-expected revenue and EPS outlook for Q4 and fiscal 2008. AP:

Qualcomm said earnings per share, excluding stock-based compensation and other charges, should be in the range of 49 cents to 51 cents per share in the fiscal fourth quarter ending Sept. 28, compared with the 54 cents analysts polled by Thomson Financial were expecting. Qualcomm estimates fourth-quarter revenues at $2.5 billion to $2.7 billion. Analysts were expecting just over $2.7 billion.

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