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Wednesday, September 27, 2006 3:05:08 PM
By Molly Peterson and Peter J. Brennan
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=QCOM:US&sid=aM3LTzoC....
Sept. 27 (Bloomberg) -- Qualcomm Inc., the world's second largest maker of cellular phone chips, is offering Broadcom Corp. an ``extremely favorable'' deal to make semiconductors for the newest handsets and settle outstanding legal disputes.
``We're willing to have, I think, a settlement that's extremely favorable to them and I'm hopeful that we'll get to that point,'' Chief Executive Officer Paul Jacobs said after a speech in Washington today. ``We've been making very earnest offers to them.''
A U.S. judge has ordered Qualcomm Chairman Irwin Jacobs and Broadcom Chairman Henry Samueli to take their differences to a mediator in San Diego on Oct. 4 as a way to resolve legal issues between the companies. Broadcom says Qualcomm is blocking it from the market for chips used in newest handsets that can browse the Internet. Qualcomm has accused Broadcom of theft.
``We felt like the conversations that have been happening previously between the chairmen were productive and then maybe when it got down in the ranks, things sort of got off-track,'' said Paul Jacobs, who is Irwin's son.
Shares of San Diego based Qualcomm fell 57 cents to $37.86 at 2:29 p.m. New York time in Nasdaq Stock Market composite trading. Shares of Irvine, California-based Broadcom climbed 46 cents to $30.32.
Broadcom spokesman Bill Blanning wasn't immediately available to comment. Texas Instruments Inc. in Dallas is the world's biggest maker of chips for cellular phones.
Patent System Works
The patent system works ``pretty well'' and the government should be ``extremely careful'' about changing it, Jacobs said during a company-sponsored event that attracted about 100 people, including congressional aides, Federal Communications Commission staff, lobbyists and journalists.
Qualcomm's profit from royalties tripled in 2005 to $1.66 billion from five years ago. This has caused resentment from some companies that must pay Qualcomm to use technology in the newest handsets, also known as third-generation, or 3-G, wireless phones. Licensees have asked the U.S., South Korea and the European Commission to conduct antitrust or patent investigations into Qualcomm's handling of use rights.
Broadcom wants the U.S. International Trade Commission to stop imports of handsets with Qualcomm's newest chipsets. Administrative Law Judge Charles Bullock is scheduled to rule on the issue Oct. 10.
Qualcomm on Oct. 2 will ask another U.S. judge in San Diego for a preliminary injunction against Broadcom, alleging theft of intellectual property. Broadcom has denied that claim.
Broadcom on Aug. 31 lost an antitrust case it brought against Qualcomm in New Jersey when a federal judge there found insufficient evidence of monopolistic behavior by Qualcomm.
Broadcom's loss ``raised the bar very high for them'' to continue legal actions, Jacobs said. ``It just shows the point that they are sort of casting around for almost anything they can do.''
To contact the reporters on this story: Molly Peterson in Washington at mpeterson@bloomberg.net ; Peter J. Brennan in Los Angeles at pbrennan3@bloomberg.net .
Last Updated: September 27, 2006 14:40 EDT
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