Qualcomm Inc. positioned itself squarely in the race to fourth-generation technology with the acquisition of OFDM technology startup Flarion Technologies Inc. Qualcomm said it will pay about $600 million for the company.
“With this acquisition, Qualcomm will be in a stronger position to support advanced development in both CDMA and OFDMA technologies,” said Paul Jacobs, Qualcomm’s chief executive officer. “The combination of Flarion and Qualcomm’s engineering resources greatly strengthens our position as a continued technology innovator and leader in the wireless industry. We believe CDMA will provide the most advanced, spectrally efficient wide area wireless networks for the foreseeable future, but with Flarion we can now more effectively support operators who prefer an OFDMA or hybrid OFDM/CDMA track for differentiating their services.”
Orthogonal Frequency Division Multiplex Access technology has often been named as the basis for wireless technologies beyond third generation. Qualcomm claims a leading patent position in CDMA and W-CDMA technology, and its acquisition of Flarion could give it a similar position for any 4G technology based on OFDM.
“With the transition to third-generation CDMA wireless services well under way, CDMA2000 and W-CDMA continue to experience substantial growth in markets around the world,” said Steve Altman, Qualcomm’s president. “The acquisition of Flarion establishes Qualcomm as a pre-eminent developer of emerging OFDMA technologies, enhances our internal OFDMA developments and, when combined with our existing portfolio, results in our owning an industry-leading OFDMA intellectual property portfolio.”
Qualcomm’s stock was up around 2 percent after the news to about $40 per share.
Founded in 2000, Flarion sells its Flash-OFDM technology around the world. The company boasts that the technology supports 1 to 1.5 megabits per second on the downlink and 300 to 500 kilobits per second on the uplink and a latency of below 50 milliseconds. Flarion has conducted numerous Flash-OFDM trials with the likes of Nextel Communications Inc. in North Carolina, T-Mobile International AG in the Netherlands, Vodafone Group plc in Japan and Cellular One in Texas. The company has also scored commercial deployments with Retel d.o.o. and Arbital Communications Sdn. in Zagreb, Croatia; Citizens Wireless in Blacksburg, Christiansburg and Radford, Va.; and most notably with Digita Oy to cover Finland.
Interestingly, Qualcomm is not new to the OFDM space. The company’s MediaFLO mobile TV offering runs on OFDM technology.
Under the terms of the acquisition, Qualcomm said it will issue about $267 million in stock, assume existing Flarion options and warrants of about $128 million, and pay a total of $205 million in cash. Qualcomm also said it would take a hit of around 3 cents per share in its fiscal year ending September 2006 due to the transaction.
