Shares of Qualcomm rivals Texas Instruments Inc and Broadcom Corp fell as investors feared the collaboration would hurt them. Nokia is TI's biggest client.

Qualcomm, a wireless technology license and chip supplier, said it was raising its outlook on the strength of growth in phones with high-speed Web links, even before adding new royalties and an upfront payment from Nokia.

While the lack of specific financial details around the deal caused some debate, analysts said the settlement was foremost on investor's minds as it ended the uncertainty of the three-year dispute between Nokia and Qualcomm.

"This agreement certainly trumps the outlook because it removes a large weight on the stock, which has been a big concern for a long time," said ThinkPanmure analyst Michael Burton. "This allows Qualcomm to go forward to gain share in the wireless market."

Qualcomm and Nokia announced the legal settlement late on Wednesday, ending acrimonious litigation that had spanned three continents. The companies also announced license agreements for multiple technologies.

NOKIA BOOST

Qualcomm raised the low end of its earnings outlook for the year ending on Sept. 28 to $2.11 per share from $2.09, excluding items such as its investment arm, while keeping the high end at $2.13.

The company said it now expected revenue of $10.3 billion to $10.5 billion for the year, compared with its previous forecast of $10 billion to $10.4 billion.

Analysts had seen Qualcomm's original outlook as conservative. On average, they were already expecting earnings per share of $2.15 on revenue of $10.5 billion, according to Reuters Estimates.

Qualcomm also said it expected the agreement with Nokia to add another 7 cents to 13 cents a share to fiscal 2008 earnings, although it is still in the early stages of working out the mechanics of the deal.

The company told analysts on a conference call that the pact would raise fiscal 2009 earnings per share by between 20 cents and 28 cents, including Nokia royalty payments and lower legal expenses.

The companies did not announce the financial specifics of the deal, but Qualcomm executives said the settlement involved a "very substantial upfront payment" from Nokia.

Some analysts were worried that a lowering of royalty rates paid by Nokia to Qualcomm under the new agreement would incite other Qualcomm customers to bring their own legal suits. But Qualcomm dismissed these concerns.

"If we offer the package and terms of the Nokia agreement to other licensees, I would be very happy if they would accept it," a Qualcomm executive said on the call.

Qualcomm forecast fourth-quarter earnings per share of 49 cents to 51 cents on revenue of $2.5 billion to $2.7 billion.

This compared with the analysts' average forecast for earnings per share of 53 cents on revenue of $2.7 billion, according to Reuters Estimates.

Investors expecting the settlement to lead to a Qualcomm chip supply agreement with Nokia pushed down shares of TI and Broadcom as such a deal could hurt their prospects at Nokia, the world's biggest mobile phone maker.

Broadcom is embroiled in its own legal battles with Qualcomm. The company is hoping that the Qualcomm-Nokia deal is a sign that Qualcomm would be more willing to settle their case, according to Broadcom spokesman Bill Blanning.

Shares of Qualcomm rose as high as $54.51 Thursday and were still up $7.62, or 17 percent, at $52.44 at midday, while Nokia's U.S. stock was up 87 cents, or 3.3 percent, at $27.57.

Broadcom stock, which had been boosted by a strong earnings report Tuesday, was down $2.10, or 8 percent, at $24.14. TI shares -- which already had fallen after a weak earnings report earlier in the week -- were down 75 cents or 3 percent at $24.27. (Additional reporting by Tarmo Virki in Helsinki; Editing by Derek Caney, Maureen Bavdek, Dave Zimmerman and Lisa Von Ahn)