Broadcom Scores Verizon Coup - TheStreet

Broadcom Scores Verizon Coup

Shares jump 5% on a licensing victory for the Qualcomm rival.
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Broadcom (BRCM) bagged Verizon (VZ) - Get Report in the latest twist to the ongoing patent tug-o-war with Qualcomm (QCOM) - Get Report.

The Irvine, Calif., communications-chip maker says it has signed a licensing deal with Verizon Wireless -- co-owned by Verizon and

Vodafone

(VOD) - Get Report

-- to allow previously banned 3G phones into the U.S.

The deal calls for Verizon to give Broadcom $6 for every phone and wireless data card that has the disputed wireless technology that federal trade regulators banned. Earlier this year, the U.S. International Trade Commission determined that Qualcomm had infringed on Broadcom patents and prohibited imports of phones with these chips.

Qualcomm is fighting the decision, and the Bush administration has until Aug. 6 to throw out the ITC decision. It is not clear whether the license would still apply if the ban was lifted, but Verizon will not pay Broadcom more than $40 million a year, or $200 million over the life of the contract.

Prior to this deal, Verizon had joined Qualcomm in seeking to have the ban overturned so it would have a supply of 3G phones to sell during the all-important holiday season.

"We are pleased to have worked out an agreement with Broadcom to ensure continued delivery of new and innovative products to our customers," Verizon Wireless CEO Lowell C. McAdam said in a press release.

The licensing deal is also good news for

Motorola

(MOT)

. Among the phones affected by the ban was the Razr 2, the new flagship phone that is expected to help Motorola win back sales it has lost to rivals like

Nokia

(NOK) - Get Report

,

Samsung

,

Research in Motion

(RIMM)

and

Apple

(AAPL) - Get Report

.

Broadcom shares rose $1.30 to $33.66 in afternoon trading Thursday.

Meanwhile, Qualcomm shared dropped 56 cents to $44.54 on concerns that the new licensing arrangement may undermine its court battles with Broadcom.