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Qualcomm snaps up Flarion
Sinead Carew
AUGUST 12, 2005

QUALCOMM is set to buy wireless broadband technology firm Flarion Technologies to expand its own wireless technology portfolio in a cash and stock deal worth about $US600 million ($776 million).

It could pay another $US205 million if the companies reach certain milestones within eight years of the deal closing.
Shares of Qualcomm, a supplier of wireless chips and technology licenses, rose more than 3 per cent with one analyst saying its purchase of the high-profile private firm could help Qualcomm dominate future high-speed wireless technologies.

"Both companies are doing well on this deal," Deutsche Bank analyst Brian Modoff said. "Flarion investors are getting a good exit strategy and Qualcomm is continuing to have a strong patent portfolio."

The combination could be bad news for developers of future versions of WiMax, an emerging high-speed wireless technology which includes chip giant Intel among its most prominent backers, Mr Modoff said.

Developers of mobile versions of WiMax - expected to be based on OFDM technology - could have a "difficult time designing their systems for mobility without infringing Qualcomm patents" as a result of the deal, he said.

The combined company has more than 300 OFDM patents, according to a Qualcomm executive who said vendors developing WiMax would need to buy licences for some of its patents.

"We are willing to license these patents on fair and reasonable terms," Qualcomm's President Steve Altman said in an interview.

Qualcomm already dominates the market for CDMA. It also sells licenses and chips for W-CDMA, a high-speed wireless standard that is emerging in Europe and other parts of the world.

Flarion was spun out of the development arm of Lucent Technologies, which no longer has an ownership stake.

Many operators around the world have tested Flarion's gear in their search for high-speed wireless technology but it has had little commercial success so far, as most operators are currently building networks based on Qualcomm technology.

Qualcomm said it plans to continue developing Flarion's FLASH-OFDM products and could integrate them with its own technology if there is demand.

"It would take some time and would depend on carrier interest," Mr Altman said.

Reuters