Chips maker Qualcomm to buy Flarion for $600 million cash, stock Associated Press Thursday, August 11, 2005 SAN DIEGO - Qualcomm Inc. has agreed to acquire privately held Flarion Technologies for $600 million (euro484 million) in cash and stock, in a deal that will expand its wireless-technology offerings. Qualcomm, which makes chips used in cell phones, may pay an additional $205 million (euro165 million) in cash and stock if the acquired business meets certain milestones in the next few years, the company said Thursday. Flarion, based in New Jersey, was launched in 2000 with investments from Lucent Bell Labs and venture capitalists. The company also has offices in London, Tokyo, Sydney and Singapore. Flarion develops technology called orthogonal frequency division multiplex access, or OFDMA, which can be used to transmit data wirelessly at high speeds. Qualcomm said the technology will complement its own code division multiple access, or CDMA technology, widely used cell phones. Qualcomm currently dominates CDMA technology. Companies that make cell phones or cell-phone chips with CDMA technology pay a licensing fee to Qualcomm. Qualcomm anticipates one-time charges of roughly $10 million, mainly related to in-process research and development, upon closing. The deal is expected to close later this year, pending regulatory approval and other customary conditions. Upon closing of the acquisition, Qualcomm expects to issue stock worth about $267 million (euro215 million), assume existing Flarion options and warrants worth roughly $128 million (euro103 million) and pay about $205 million in cash, net of Flarion's projected cash balance. I also found this Editorial about this buyout to maybe explain it further: OFDM--The new CDMA? August 16, 2005 Qualcomm has come a long way from being a one-technology horse. The king of CDMA just added Flarion's significant portfolio of orthogonal frequency division multiplexing (OFDM) intellectual property to its growing list of technologies. Couple that with its efforts in wideband CDMA and multicast multimedia, and Qualcomm is much more than just a champion of its original CDMA patents. Most of the industry, however, has approached the Flarion acquisition as a separate but parallel technology to its CDMA development tracks. There's a bigger picture that they might be missing, though. There's a good chance that Qualcomm will pursue OFDM as the eventual successor of its current CDMA technologies, not as an alternate or complementary technology. In fact, it's already indicated it's planning just that. OFDM is the modulation scheme behind its MediaFlo broadcast video technology, and while that's a proprietary technology, Qualcomm has also shown its willingness to pursue OFDM in the standards bodies. In its last submission to the 3GPP2 for the next revisions of EV-DO, Qualcomm proposed OFDM to power the technology's downlink. Qualcomm isn't the only vendor looking at OFDM. Most of the major wireless infrastructure makers have been running OFDM trials of their own, and almost all of them concede that the modulation scheme coupled with next-generation wireless technologies is currently the fastest thing they have as a candidate for future 4G networks. Qualcomm isn't acquiring a new product line. It's acquiring a technology that will likely be the basis of all its future product lines.
I want to see Sprint/Nextel use that for their 2.5Ghz spectrum. That will be nice competition to other broadband offerings.
I agree! Now with QCOM owning Flarion, there are resources behind OFDM to make it work. I was worried that if a major network decided to go OFDM, that Flarion would not have the resources to support such an effort. Such a failure could have killed OFDM.
