Qualcomm Investment Arm Sets Its Sights on Europe

May 24, 01:30 PM

Current Headlines: By Kathryn Balint, The San Diego Union-Tribune

May 24--Qualcomm's investment arm announced yesterday that it plans to invest $135 million in European companies with innovative technologies and services that enhance wireless communications.

The first company to benefit is Paris-based Streamezzo, a provider of interactive wireless services. Neither Streamezzo nor Qualcomm disclosed the amount of investment in Streamezzo.

San Diego-based Qualcomm, a developer of wireless technology, has actively invested in businesses in South Korea, China and Japan. Now its investment arm, Qualcomm Ventures, is turning its attention to Europe.

The company said it is focusing on small- to medium-sized enterprises and startups that support high-speed cellular technology known as wideband CDMA. Qualcomm owns key patents for the technology and stands to benefit by collecting royalties from makers of wideband CDMA cell phones.

Qualcomm Europe President Andrew Gilbert said in a news release that the company is "actively seeking opportunities to invest in and support promising European companies."

Europe is an important market for Qualcomm. Wireless carriers in Europe are upgrading their networks from Global Systems for Mobile Communications technology to wideband CDMA. The GSM wireless market is dominated by European cell phone and wireless equipment makers Nokia and Sony Ericsson.

Qualcomm's royalty rates on its wideband CDMA technology are at the center of an investigation by the European Commission, the European Union's administrative arm. The investigation was prompted in 2005 when six telecommunications companies filed separate complaints against what they described as Qualcomm's "anti-competitive conduct." The companies are Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments.

Financial analyst Steven Re, president of Quality Growth Management, based in Rancho Santa Fe, said Qualcomm's European investment is good for the company in terms of boosting its market share there. Re said the move is politically prudent, too.

"Europe is important because that's where GSM is transitioning to WCDMA faster than anywhere else in the world," Re said.

He said the companies that Qualcomm invests in create a larger "political constituency" for the San Diego company. Re said the European wireless carriers -- which stand to gain from the high-speed data rates of WCDMA -- are already Qualcomm allies.

"Now, you're going to have the smaller research and development companies, and they're going to be on Qualcomm's side," Re said.

Qualcomm shares closed at $44.84 yesterday, down $1.54, or 3 percent, on the Nasdaq.

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