Under the terms of an agreement announced Wednesday, Huawei has agreed to withdraw its lawsuit against Motorola and Nokia Siemens Networks. In return, Motorola has agreed to drop its corporate espionage case against Huawei and pay the company a one-time fee to transfer some of its confidential information to NSN.

The size of the fee wasn’t disclosed, though Motorola Solutions said separately that it is lowering the price of the network equipment assets it’s selling to Nokia Siemens Networks to $975 million from $1.2 billion.

Coincidence, I’m sure…

In any event, the companies are both very happy to put this particular legal debacle behind them–particularly Motorola Solutions, which can now move on to the more important business of closing its NSN transaction.

“We regret that these disputes have occurred between our two companies,” Greg Brown, president and CEO of Motorola Solutions, said in a statement. “Motorola Solutions values the long-standing relationship we have had with Huawei. After reviewing the facts, we decided to resolve these matters and return to our traditional relationship of confidence and trust. I am pleased that we can again focus on having a cooperative and productive relationship.”

Being shown at a design show in Milan, the Folded Leaf phone was designed in conjunction with Claesson Koivisto Rune, a Swedish design firm. The phone is something of a throwback, forsaking smartphone features in favor of a device that focuses on being easy to hold and use.

“We place the consumer experience at the heart of our business, and that begins with product design,” Huawei Device chief marketing officer Victor Xu said in a statement. “We are very excited to be showcasing Folded Leaf and will continue to push the boundaries of trends and design ideas to offer diverse experiences for consumers.

Huawei has been looking to broaden its international profile and has sought to pave the way for a deeper presence in the U.S. market. The company has been battling criticisms that it lacks respect for intellectual property rights.

The Folded Leaf marks the first time that Huawei has partnered with a design firm and its first appearance at the Milan event. In addition to the Folded Leaf, Huawei is also using the event to show off a couple of its latest products–the IDEOS X3 and X5 smartphones and the S7 Pro tablet.

Huawei Technologies Co. and ZTE Corp. already sell mobile devices in the U.S., but many of them are basic flip phones and mobile modems or are only for smaller prepaid-phone companies. The companies want that to change.

ZTE says it will quadruple the number of smartphones it ships globally to 12 million this year, including its first model for a top-tier wireless provider in the U.S. Huawei, which already provides a smartphone to the smaller prepaid providers, said it is in talks with the four national carriers.

Huawei’s and ZTE’s push into the U.S. comes at fortuitous time for the companies. Both are known for their ability to supply low-cost products, which have become more crucial as carriers seek to get smartphones in as many hands as possible. As a result, both companies are expecting an expanded presence in the U.S.

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That’s right, 17 companies all at once, and all over six patents related to Wi-Fi that it says are being infringed. The defendants include household names like Dell, Research In Motion, Intel, Canon and Asus, as well as some lesser known names in tech like Atheros–the wireless chipmaker that’s being acquired by Qualcomm–Marvell Semiconductor and the Chinese networking concern Huawei.

The suit was filed in the United States District Court Eastern District of Texas, which is notable because this district has developed something of a reputation of being friendly to so-called patent trolls, companies who make their living not by making products, but by suing established companies with the resources to either pay damages or cash settlements after arguably infringing on some patents they happen to have. When a few cases filed in this court went in favor of the plaintiff some years ago, numerous others followed. It also gained the nickname of “rocket docket,” meaning patent cases tended to be wrapped up inside of one to two years, much faster than in other courts.

Mosaid says it has licensed the six patents in question to 15 other companies, some of which you’ve heard of. They include Sony, Samsung, Panasonic and Nokia.

And if you’re not on either list–sued today or working with a license–and sell a Wi-Fi enabled product, you can probably bet that Mosaid is coming for you sooner or later. As Mosaid CEO John Lindgren put it in a company statement: “We believe that all companies offering products that implement the Wi-Fi standard require a license to our wireless patents.” Sounds like Mosaid’s lawyers are going to be busy.

“The allegation that Huawei somehow poses a threat to the national security of the United States has centered on a mistaken belief that our company can use our technology to steal confidential information in the United States or launch network attacks on entities in the U.S at a specific time,” Huawei Chariman Ken Hu wrote. “There is no evidence that Huawei has violated any security rules….If the United States government has any real concerns of this nature about Huawei, we would like to clearly understand those concerns, and whether they relate to the past or future development of our company….We sincerely hope that the United States government will carry out a formal investigation on any concerns it may have about Huawei.”

A brazen move for Huawei, perhaps even a measure of last resort. But after the events of the past few years, why not? The company’s efforts to gain a foothold in the U.S. market have been thwarted time and again by national-security concerns. In 2008 such anxieties forced it to abandon a $2.2 billion deal to acquire network equipment vendor 3Com. And just days ago they foiled its $2 million deal to acquire the assets of 3Leaf Systems.

So why not call the U.S. government’s bluff on concerns that it’s a threat to national security? Certainly, it obliterates U.S. calls for transparency and goes a long way towards resolving the trust issues plaguing the company in the States. And it puts Washington in a conflicted position: Either disclose the evidence it has against Huawei that’s keeping the company out of the market, or admit that there isn’t any.

“Such a transfer, if consummated in its originally contemplated form, will result in the massive disclosure of Huawei’s confidential information to NSN, with irreparable harm to Huawei,” the company claims in its suit. “A large number of Motorola employees, many carrying direct knowledge of Huawei’s confidential information, would become employees of NSN. Huawei hereby sues to obtain preliminary injunctive relief to prevent such harm pending an arbitration under the agreements.”

An unfortunate turn of events for the Motorolae, whose newfound individuality is at least partially the result of the Nokia Siemens deal. Ironic, too, considering Motorola sued Huawei for corporate espionage last year.

If such a deal happens, it would get Qualcomm, whose business is tied most closely to the wireless handset business, into the business of supplying chips for Wi-Fi and other wireless networking technologies like GPS, Bluetooth and Ethernet. Atheros’s Align product is a set of chips for 802.11n Wi-Fi networking. According to its 10K report, 43 percent of its fiscal 2009 sales were from its networking segment, which went into wireless routers and Ethernet switches, while 37 percent of sales went into notebook PCs, and 20 percent into consumer devices like game systems, navigation devices and Blu-ray players. These are all markets that Qualcomm has had trouble penetrating.

Atheros says its biggest customers are Hon Hai Precision Industry, the Chinese company that owns the manufacturing behemoth Foxconn, and Nintendo, though that only paints a partial picture.

Update: I asked market research firm iSuppli to look through its database of product teardowns to see where Atheros’s chips have shown up in the past, and the list is extensive. Atheros networking chips show up in numerous notebooks, including Hewlett-Packard’s, Toshiba’s, Acer’s, Asus’s, and Apple’s iMac. They’ve also been seen in several handheld products, including Amazon’s third-generation Kindle, Samsung’s Galaxy S, Sony Ericsson’s Xperia X10, the Nintendo DSi, and Microsoft’s Zune HD. Networking customers include Netgear, 2Wire and Huawei. At least now it’s pretty clear why Qualcomm might be interested.

Sales in 2009 were $522 million, and the average forecast by analysts calls for it to report sales of $922 million for the year ended Dec. 31. Atheros shares naturally shot up by a whopping 19 percent on word of a potential deal. At $44 a share, the stock is now trading at nearly double its 52-week low.

A deal for Atheros would also get Qualcomm’s year off to a potentially positive start following the demise of its FloTV business, though there are also several potential developments in the offing for Qualcomm, including augmented reality and a possible design win in Apple’s iPhone 5. Qualcomm investors appeared to like the notion of a combination with Atheros, too, and sent its shares up by 1.5 percent.

Meanwhile, here’s Walt Mossberg’s interview with Qualcomm CEO Paul Jacobs at last year’s D8.

]]> http://allthingsd.com/20110104/qualcomm-close-to-deal-for-atheros/feed/ 1 http://allthingsd.com/20100517/palms-suitors/ http://allthingsd.com/20100517/palms-suitors/#comments Mon, 17 May 2010 11:50:29 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=40742 Palm’s last-minute sale to Hewlett-Packard in April wasn’t nearly so last-minute or straightforward as it seemed.

A new Securities and Exchange Commission filing from the company reveals that the buyout was the result of a process that began in February with a list of 24 potential acquirers that was subsequently winnowed down to 16 companies, then to five and finally to three.

“From February 25 to April 1, Palm management, Goldman Sachs and Qatalyst Partners were in contact with a total of 16 companies including HP,” Palm says in its Preliminary Merger Proxy. “Of these, six companies, including HP, entered into nondisclosure agreements and participated in meetings with Palm and its advisors to review non-public information concerning Palm regarding a strategic transaction.”

And of those six, three made formal acquisition proposals after Palm (PALM) determined that it preferred an outright sale to the intellectual property transaction that at least one of those companies had been leaning toward.

The two companies in addition to HP that presented acquisition proposals are referred to as Company A and Company B. A fourth company, referred to as Company C, had initially been in discussions with Palm regarding an intellectual property transaction and later made a proposal to acquire Palm….A fifth company, referred to as Company D, contacted Palm on March 18 to discuss an intellectual property transaction but did not make a proposal to acquire Palm. Company D did not enter into a nondisclosure agreement and did not review non-public information about Palm. Discussions with Company D continued intermittently until April 15.

So what are companies A, B, C and D? HTC, Lenovo, Dell (DELL) and Huawei, most likely, though there’s a chance that ZTE (Zhong Xing Telecommunication Equipment Company Limited), which was believed to be interested in Palm, could be one of the four as well.

Recall that HTC was rumored to have dropped out of the bidding for Palm in late April. At that point, speculation on potential acquirers focused on Lenovo, though already, some–ahem–were suggesting the more likely suitor was HP (HPQ).

Dell and Lenovo would have been interested in Palm for many of the same reasons as HP–a turnkey smartphone division with a robust, scalable operating system. And for telecommunications equipment suppliers Huawei and ZTE, the acquisition of Palm would have been a quick and easy way to leap into the smartphone market with a known brand and strong OS.

Anyway…ultimately the bidding war for Palm came down to a battle between HP and that mysterious Company C. HP’s first offer was for $4.75 a share in cash. A second company matched that bid, and a third proposed an all-stock deal. At this point Company C was interested only in an intellectual property deal.

After Palm balked at those $4.75 bids, the company that had proposed the all-stock-deal dropped out. And Company C suddenly circled back with an acquisition offer of $6 to $7 per share, evidently having determined that its need for Palm’s patent portfolio merited the acquistion price. That sounds to me like HTC, which is facing a nasty patent battle with Apple (AAPL), a battle in which Palm’s patents could have proven quite handy.

But C’s proposal included a $60 million kill fee and some other conditions Palm didn’t much care for. Then the company reduced its bid to $5.50 a share. At that point Palm approached HP and closed the deal.

On April 24 Palm’s CEO and advisors communicated to HP and its advisors that, to remain in the process, HP must improve its offer significantly and immediately. Later that day, HP’s financial advisors verbally delivered a proposal to acquire Palm for $5.70 per common share in cash. HP’s financial advisors also requested a five-day exclusivity period. On April 25 HP delivered a letter confirming this proposal with a target announcement date of close of business on April 27 and sent a draft exclusivity agreement covering such period on April 26.

]]> http://allthingsd.com/20100517/palms-suitors/feed/ 0 http://allthingsd.com/20081223/report-nortel-mulling-1b-offers-for-various-assets/ http://allthingsd.com/20081223/report-nortel-mulling-1b-offers-for-various-assets/#comments Tue, 23 Dec 2008 20:00:04 +0000 Tiernan Ray http://voices.allthingsd.com/?p=7068 Nortel Networks (NT) the once multibillion-dollar telecom vendor now trading as a micro cap, may be considering offers of as much as $1 billion for its product portfolio of gear that lets phone companies string Ethernet networking to homes and businesses, according to a report in the Toronto Globe & Mail. Avian Securities’ analyst Avi Cohen argues the most likely bidders are Ericsson, Huawei, Nokia’s (NOK) Nokia Siemens, and Cisco Systems (CSCO), with Alcatel Lucent (ALU) and Motorola (MOT), less likely because of their own titanic problems.

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]]> http://allthingsd.com/20081223/report-nortel-mulling-1b-offers-for-various-assets/feed/ 0 http://allthingsd.com/20070928/ddv20070928/ http://allthingsd.com/20070928/ddv20070928/#comments Fri, 28 Sep 2007 18:00:28 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20070928/ddv20070928/

[ See post to watch video ]

]]> http://allthingsd.com/20070928/ddv20070928/feed/ 0 http://allthingsd.com/20070928/3com-bain/ http://allthingsd.com/20070928/3com-bain/#comments Fri, 28 Sep 2007 14:41:20 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20070928/3com-bain/ Looks like the leveraged-buyout market isn’t as lousy as you’d think. This morning 3Com agreed to be acquired by private-equity firm Bain Capital Partners LLC for about $2.2 billion in cash. As part of the deal, which is to close in the first quarter, Chinese networking giant Huawei Technologies will take a minority stake of 10% in 3Com. “The 3Com board of directors and senior management team have thoroughly reviewed our strategic alternatives and have determined that the agreement with Bain Capital provides the best value for 3Com shareholders,” said Edgar Masri, 3Com’s chief executive officer. “We believe that this agreement better positions 3Com to establish itself as a global networking leader, which will benefit our employees, our customers and our partners.”

Don’t forget shareholders. 3Com’s stock spiked on news of the deal, sending it upward 36%, or $1.33, to $5.01, in morning trading.

For 3Com, the deal is another turn in its byzantine relationship with Huawei. In November 2003, the two companies allied to found router and switch manufacturer Huawei-3Com. Then, in March of this year, 3Com paid $882 million to buy Huawei out of the joint venture. Now Huawei’s got a minority stake in 3Com that may well increase over time. Could end up that China’s fast-growing networking-equipment vendor will end up controlling 3Com after all …

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