"Wireless telephone giant Qualcomm Inc. (QCOM.O) on Monday said it had acquired 10 percent of free Internet access provider NetZero Inc., (NZRO.O) in a deal that reflects growing interest among mobile phone providers in building Internet links.
"Qualcomm said it paid $144 million for a 10 percent stake in NetZero, an advertising-supported, free Internet access provider that has three million users. The wireless communications company now owns about 11.5 million new shares of NetZero that were bought for about $12.50 a share.
"The deal led to a leap in NetZero's stock price, which rose 3 -5/16 to 11 -7/16 on a day when many Internet stocks were falling amid worries that money-losing sites have a growing need for cash. The Qualcomm deal provides a large cash injection for NetZero, which reported a $24.6 million net loss in its latest quarter. Qualcomm stock, meanwhile, closed 9-7/8 lower at 99-5/8.
"The companies said they plan to work together in a number of areas to boost the growth of wireless Internet access, although initial plans simply involve promoting each other's existing products with links on their respective Web sites.
"Mark Goldston, chief executive officer of NetZero, said in an interview that the next step would be to create ``a user interface for mobile phones, so when you turn on the phone you can navigate over the Internet using NetZero.''
"But beyond that, the companies disclosed few specifics about how they would work together. ``Those plans are still being contextualized,'' said Goldston.
"Dr. Paul Jacobs, executive vice president of Qualcomm, said that his company's wireless communications technology could use ``the innovative technologies, business models and revenue streams that NetZero has developed to drive wireless Internet adoption.''