An international arbitration panel ruled Monday that Qualcomm Inc. (Nasdaq: QCOM) must share its code division multiple access (CDMA) sales royalties in South Korea, resulting in an $80 million charge to the company.
Shares of the wireless technology company slipped 1.75 to 101.50 in pre-session trading on the Island ECN network.
The International Court of Arbitration of the International Chamber of Commerce ordered Qualcomm to share a part of the royalties it receives on sales of certain CDMA equipment the company sells in Korea with the Korean Electronics Telecommunications Research Institute.
The ruling requires the company to take a one-time charge of about $80 million, to be recorded in Qualcomm's fiscal first quarter, ending this month. In addition to this back payment charge, the arbitration board also said that the company must continue to share royalties on certain Korean CDMA sales. That cost is expected to be about $4 million per quarter.
Qualcomm's CDMA technology, which recently had its European patents upheld, is the company's format for wireless applications that competes with more widely used European GSM standard.
"While we are disappointed by the ICA's decision, we continue to look forward to receiving strong royalty revenues from sales of CDMA equipment in Korea," said Louis Lupin, Qualcomm's general counsel. The company also indicated that it is evaluating its options regarding the award.
Separately, Qualcomm announced that it has expanded its CDMA license agreement with Tektronix, Inc. (NYSE: TEK), in an effort to develop and manufacture third-generation wireless technologies. The terms of the new agreement were not disclosed.
Reuters contributed to this report.