Sun, Jun 25, 2006 - Page 11 News List

Qualcomm plays down Nokia pullback

NO PROBLEMO The maker of chips for mobile phones moved to calm fears that Nokia's decision to reduce its investments in CDMA technology would hurt its sales

BLOOMBERG

Qualcomm Inc, the second-largest maker of chips for mobile phones, said Nokia Oyj's plans to reduce investments in code-division multiple access technology won't "impede" the growth of CDMA.

Nokia's decision also won't "adversely" affect Qualcomm, the San Diego-based company said on Friday in a statement. Espoo, Finland-based Nokia, the world's biggest handset maker, has had "very little success" in CDMA technology, Qualcomm said.

Nokia on Thursday ended a planned venture with Sanyo Electric Co to develop CDMA-based cell phones, saying the technology is losing momentum in newer markets. Qualcomm, which dominates in CDMA chips, collects royalties from companies that use its technology. Nokia's plans won't affect Qualcomm's sales or profit forecasts this year, chief financial officer William Keitel said.

"There were some harsh statements and we're trying to clear the air on our side," Keitel said in an interview. "Various people were concluding that this was going to impact the growth of CDMA 2000. Nokia had a very small role in CDMA 2000."

CDMA technology accounted for 18 percent of the global handset market in the first quarter, down from a peak of 21 percent in 2004, according to researcher Strategy Analytics Ltd.

"Investors are concerned that Nokia's decision to pull out of manufacturing CDMA phones represents a blow to Qualcomm," wrote Caris & Co analyst Susan Kalla in a note to investors.

This could give Nokia "the upper hand in its contract dispute with Qualcomm, she said.

Australia's Telstra Corp is switching to GSM and carriers like Vivo, Brazil's largest, and Reliance Communications Ltd, India's largest CDMA carrier, are discussing increased investments in GSM.

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