L.M. Ericsson wants to renegotiate the price it paid for Qualcomm Inc.’s infrastructure division, Qualcomm revealed in a recent Securities and Exchange Commission filing.
Qualcomm and Ericsson declined to comment on what terms Ericsson wants to renegotiate, but both companies indicated they were in discussions. If negotiations break down, Ericsson could sue the company.
Ericsson said it paid less than $120.8 million net for Qualcomm’s Code Division Multiple Access infrastructure operations, which industry insiders said was a modest amount. The net amount included compensation for cross licensing CDMA patents the two companies own.
Qualcomm’s sale to Ericsson ended their long-running patent dispute over CDMA technology and publicly settled international debate over third-generation
CDMA-based technology.
Terms of the sale were never disclosed, but investors and media reports continually have heralded the deal as a major win for Qualcomm, assuming Ericsson would pay a large chunk for CDMA royalties to Qualcomm and take Qualcomm’s struggling infrastructure division in the process. Qualcomm’s stock has skyrocketed since the March announcement and on assumptions that Qualcomm will score big as the world moves toward third-generation systems based on some form of CDMA technology.
But the deal wasn’t just a win for Qualcomm, Ericsson noted.
“We have a lot of patents to CDMA,” said Kathy Egan, spokeswoman for Ericsson. “It involves the soft-handoff issue, which is critical to the technology. This is by no means a one-way win.”
At one point, Ericsson and Qualcomm were ready to head to court over eight Interim Standard-95 patents Ericsson said it owned. The patents mostly cover soft-handoff techniques, key elements to any CDMA system, including 3G networks using W-CDMA and cdma2000 technologies.
