Mr. Stomach, meet Mr. Throat. Yes, Qualcomm (QCOM) - Get QUALCOMM Incorporated Report investors, Nokia (NOK) - Get Nokia Oyj Sponsored ADR Report signed up to license those patents.

Qualcomm investors have stocked the fridge with champagne, ready for the day when market leader Nokia would bow to the CDMA master and agree to pay Qualcomm royalties on its handsets. Before the market opened, Nokia and Qualcomm set them toasting, announcing Nokia would pay licensing fees for Qualcomm's code division multiple access technology for third-generation (3G) handsets as well as infrastructure equipment. Qualcomm was up more than $5 on the news, almost a 10% gain.

Cue the angels. Sing! Sing!

"This takes a lot of uncertainty out of the Qualcomm story," says Peter Friedland with

WR Hambrecht

. "There were a number of overhangs, and now they're moot."

Specifically, Qualcomm investors were worried about the possibility that Nokia would try to use its own intellectual property to build 3G phones and work around Qualcomm's CDMA patents. CDMA licensing is Qualcomm's bread and butter, and the absence of the leading mobile-phone maker has left a doubt-inspiring gap in its lineup. Another question was whether Nokia would agree to license Qualcomm's technology, but would try to throw its weight around to get a better price.

Tuesday's release put all those fears to rest as Nokia signed on to expand its Qualcomm relationship to the next generation 1X, CDMA 2000 and W-CDMA flavors of Qualcomm's CDMA technologies at the same full royalty rates it licensed older second-generation handset technology back in 1992. "As we go forward on third generation and concentrate on wideband CDMA," explained Nokia spokesperson Megan Matthews, "this ensures that we have access on any relevant patents Qualcomm may hold."

"Qualcomm never capitulated and Nokia signed on at the same rate, even though Nokia had fairly compelling arguments," says

Merrill Lynch

analyst Bill Choi of the possibility Nokia wouldn't be forced to pay full royalty prices on the millions of phones it will sell in the future. "They said 'we're the largest handset manufacturer, with close to 40% market share. The world is going to go W-CDMA. You should give us a volume discount.' They did not get that." Choi upped his intermediate rating on Qualcomm from neutral to accumulate. Merrill Lynch hasn't done banking for the wireless technology firm.

Additionally, the new agreement includes network infrastructure, which wasn't part of the 1992 licensing deal, as Nokia tries to increase its market share in that



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-dominated part of the wireless equipment business. You'll remember that when

China Unicom


handing out CDMA contracts on May 1, Nokia wasn't included. It wasn't so much a slight as a reminder that Nokia is still an up-and-coming infrastructure player and CDMA is not one of its strengths at the moment. CDMA equipment is Ericsson's,









strong suit.

Qualcomm also will be able to use Nokia-patented technology in its mobile-phone chipsets. Happiness, all around. Especially for Qualcomm investors. Raise those glasses.