Shares in Qualcomm shot up by more than 20 per cent today after the chip-maker announced it settled a long-running legal dispute with Nokia in a deal thought to be worth hundreds of millions of dollars.

The companies did not diclose financial details of the settlement, but said it involved a 15-year agreement under which Nokia pay a "very substantial" upfront amount as well as ongoing royalities to Qualcomm for the use of its patents.

In an earnings call today, Qualcomm raised its guidance for the current quarter and full fiscal year as a result of the deal.

Analysts said the deal would remove a great deal of uncertainty of the industry because it brought to an end a year-long dispute between the world's largest handset manufacturer and the holder of one of the most important patents in wireless technology.

According to one estimate, Nokia would have owed Qualcomm about $600 million in royalty payments in 2008 alone under prior agreements made between the companies.

Qualcomm said it had increased its estimated fourth quarter earnings per share to between 49 and 51 cents as a result of the deal, and forecast full year earnings of between $2.11 and $2.13 - of which the agreement with Nokia would account for 7 to 13 cents.

For fiscal 2009, the deal would likely contribute to an increase in earnings per share of between 20 and 28c, Qualcomm said - partly because of improved revenues as a result of the deal, and partly because of reduced expenditure on legal fees.

One analyst said the deal would result in Qualcomm saving up to $200 million a year in legal fees.

In early trading, Qualcomm shares were up 22 per cent at $54.63 - adding more than $14 billion to the value of the company. Nokia shares were up 4 per cent at $27.65.

Qualcomm and Nokia have been squabbling in court since April last year, when a deal in place since 2001 under which Nokia licensed Qualcomm's proprietary technology expired.

Nokia had argued that Qualcomm was charging too much for the use of its patents, and had stopped making royalty payments - despite continuing to ship handsets which relied on Qualcomm's technology, known as CDMA.

The parties had been due to appear in a federal court in Delaware yesterday, but the session was postponed. Last night Qualcomm issued a statement saying that "all litigation" between the parties had been settled. Nokia had also withdrawn a related complaint it had lodged with the European Commission, it said.

"This agreement paves the way for enhanced opportunities between the companies in a number of areas," Paul Jacobs, Qualcomm's chief executive, said. Olli-Pekka Kallasvuo, the chief executive of Nokia, said that the agreement would be "positive for the industry."

Under the new deal - which will extend til 2022 - Nokia has been granted a license to use all Qualcomm's patents in its handsets and infrastructure equipment in return for what Qualcomm described as a "very substantial" upfront payment, and ongoing royalty payments.

Nokia has also agreed to assign a number of its own patents to Qualcomm, including some that are essential to Qualcomm's technology.

Announcing its results for the three months to June 29 - which did not include the impact of the agreement with Nokia - Qualcomm said revenues rose by 19 per cent to $2.8 billion - largely because of strong demand for high-end phones and an increased uptake of 'data services'.

Net income fell by 6 per cent year on year to $748 million, and diluted earnings per share were also down at 45c, a drop of 4 per cent.

Handset manufacturers are understood to pay Qualcomm approximately 5 per cent of the cost of every mobile phone that uses its CDMA technology.

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