Patents Raise Price Of Qualcomm's Flarion Buy

Qualcomm said Thursday that it will pay an additional $205 million for its acquisition of Flarion Technologies because of patents Flarion recently received for its mobile wireless broadband technology.

Qualcomm, which closed the acquisition of Flarion in January of this year, will pay the additional money to former Flarion shareholders. As part of the acquisition, Qualcomm agreed to make the additional payment if the patents were issued within a specified time after the closing.

Flarion is the developer of FLASH-OFDM, which is considered a wireless broadband competitor to the much-discussed WiMAX, which is being championed by Intel. Qualcomm has said it intends to become a major developer of next-generation Orthogonal Frequency Division Multiplex Access (OFDMA) technology and also to offer Flarion's existing FLASH-OFDM products.

"The rapid issuance of these patents is yet another indicator of Flarion's strength as an OFDMA innovator and further enhances Qualcomm's leadership position in the wireless industry," Qualcomm president Steven R. Altman said in a statement. "Achievements like this continue to demonstrate the benefits of the Flarion acquisition in expanding our leading OFDM/OFDMA intellectual property portfolio and strengthening our design and development of OFDMA systems, components, and products."

While cellular operators currently are building out their 3G cellular data networks, most industry observers expect the next generation of cellular data, often called 4G, to be based on OFDM or OFDMA technology.

Qualcomm said $185 million is payable in cash and that $75 million of that amount is not due to the former Flarion shareholders until July, 2007. The remainder is payable in Qualcomm shares, although the precise amount of the payout may be reduced somewhat depending on other circumstances surrounding the sale.