Qualcomm hit by Nokia fallout

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Qualcomm, the biggest mobile phone chipmaker, reported record sales and profits for its 2007 fiscal year but its forecasts disappointed Wall Street as it excluded possible revenues from Nokia.

Qualcomm shares fell 8.5 per cent in extended trading in New York to $36.35.

The San Diego-based company has been involved in lawsuits with Nokia in a number of countries over royalty rates for licensing Qualcomm patents for third-generation phones.

The group said it had not been recording royalty revenues attributable to Nokia’s sales since April, pending a resolution of the dispute. No progress had been made, the company said.

It estimated Nokia would have to pay the equivalent of 25 to 30 cents of diluted earnings per share in royalties in fiscal 2008 but excluded this from its guidance.

Steve Altman, president, also criticised Broadcom, its wireless chip rival. The International Trade Commission imposed a ban on the US importation of Qualcomm’s 3G chips earlier this year after it found that they infringed a Broadcom patent.

The two companies have been unable to reach a settlement. Mr Altman said Broadcom had criticised Qualcomm for high royalty rates but was asking for $6 a chip itself for the licensing of one patent.

Qualcomm spent about $200m fighting legal battles in its fiscal year ending on September 30.

It predicted that its total costs would increase by 4 cents a share in the current fiscal year as it also provided financial support to partners and tried to minimise disruption to them from litigation.

The company reported fourth-quarter revenues of $2.31bn, up 15 per cent year-on-year, and earnings, excluding certain items, of $911m, or 54 cents a share, up 29 per cent. It also forecast first-quarter earnings of 50 to 52 cents a share, below analyst estimates of 53 cents.

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