Updated from 1:12 p.m. ET

Shares of

Qualcomm

(QCOM) - Get Report

rose about 3% Friday on news that three patents on features of a technology it pioneered were upheld by the

European Patent Office

after a challenge by

Nokia

(NOK) - Get Report

.

There was also speculation that at least two service providers may upgrade to the technology, which could increase both the company's sales of those chipsets and royalty revenue garnered from licensing the technology.

Qualcomm stock rose $2.38 to $75.06, after reaching $77.50 earlier in the day. Shares of Nokia fell $3.38, or 8%, to $38.06.

Nokia, the largest maker in the world of handsets for mobile phones, initiated the proceedings in July 1998 in a dispute of three of Qualcomm's patents on features of its CDMA (code division multiple access) wireless technology.

Separately,

Lehman Brothers

analyst Tim Luke cited the telecommunications journal

Telephony

in a report that said the Brazilian operation of

BellSouth

(BLS)

subsidiary

BellSouth International

is considering a migration to a third-generation CDMA technology from TDMA (time division multiple access). Luke also believes that

Nextel

(NXTL)

is considering a migration to the same technology.

Third-generation, or 3G, technology makes possible high-speed wireless access to the Internet.

A transfer to the 3G technology, called 1X-CDMA or CDMA2000 1x, for BellSouth in Brazil could mean a similar transfer eventually for

Cingular Wireless

, the second largest mobile phone operator in the U.S. and a joint venture between BellSouth and

SBC Communications

(SBC)

.

However, any decisions probably won't be made until at least early 2001, Luke cautions.

"BellSouth is looking at technologies for next generation networks, and we're definitely looking at CDMA as an alternative," says Kevin Doyle, a spokesman for BellSouth International. But he added that he couldn't say what the company would do in any given market. A call to Nextel wasn't returned.

Decisions in 1X-CDMA's favor will be strategically important for Qualcomm. After all, the San Diego-based company is the leading producer of chips for mobile phones using CDMA technology and also garners significant revenue from the licensing of that technology.

Consideration of the migration by BellSouth and Nextel "lead us to believe that several TDMA operators are increasingly skeptical about the prospects for the development of rival

Edge

technology," writes Luke in his report. (His firm his firm has done underwriting for Qualcomm, and he rates the stock a buy.)

He adds, "Our checks indicate that increasingly operators such as Cingular may, therefore, be faced with the choice of either selecting a W-CDMA Third Generation System or choosing Qualcomm's 1X-CDMA architecture for their data upgrades."