QUICK ONLINE ACCESS PLANNED QUALCOMM BUYS STAKE IN NETZERO.

Byline: Jason Z. Cohen Staff Writer

WESTLAKE VILLAGE - Wireless giant Qualcomm Inc. has bought a 10 percent stake in free Internet service provider NetZero Inc. for $144 million in a deal whose ultimate goal is high-speed wireless Internet access.

But it won't be at NetZero's signature no-cost pricing strategy.

The deal combines NetZero's marketing ability with Qualcomm's developing high-speed wireless Internet capability.

San Diego-based Qualcomm paid $12.50 a share for 11.5 million shares of NetZero stock, a 51 percent premium above the Thursday closing price of $8.28.

Shares of NetZero soared on the announcement, closing $11.44, an increase of $3.16 a share, or 38 percent, from the Thursday close.

Qualcomm's shares fell $9.88, or 9 percent, to $99.63.

NetZero is the nation's largest free Internet service provider, and the companies will develop a plan to offer high-speed wireless Internet access using a technology Qualcomm is developing.

Qualcomm's e-mail program, Eudora, will be installed as the favored e-mail software in NetZero's software package.

Qualcomm recently relaunched Eudora as a free download that delivers advertising to its users. In that regard, the product is perfectly suited to NetZero, company Chief Executive Officer Mark Goldston said.

The two companies will share revenue on the sale of advertising for the Eudora platform, Goldston said.

NetZero is likely to depart from its giveaway strategy when it begins offering high-speed wireless services, Goldston said.

``The goal is not to do this for free. The goal is to do this at a very affordable cost,'' he said. ``At this point, we don't see how free works in the broadband space, given the current cost of bandwidth.''

Goldston said his company's goal is to begin offering customers its service across the full spectrum of connection methods, including dial-up, high-speed wireless and broadband connections.

``We will become a leader in high-speed wireless Internet access,'' Goldston said.

NetZero will outline that strategy in the coming weeks, and Qualcomm will play an integral role, he said.

At 2.4 megabaud, Qualcomm's in-development wireless format, HDR, is faster than DSL or cable connections, two of the faster Internet connections available to consumers now, he said.

HDR, when it is implemented, can be used in the home as well as in mobile devices, said Paul Jacobs, Qualcomm's executive vice president.

Jacobs said his company wants to be a leader in the convergence of wireless communication and Internet access.

The deal with NetZero gives Qualcomm a built-in market for using its current digital wireless technology to access the Internet, Jacobs said.

``By partnering with companies like NetZero, we're going to make sure that we continue to drive the demand for wireless data,'' Jacobs said.

Eudora's new format is ``very consistent with the way NetZero does business,'' he said.

Since its relaunch in February, the software has been downloaded by 500,000 users, he said.

A number of companies, including Qualcomm, Motorola Inc., Nokia and Lucent are trying to develop wireless Internet access at speeds that would allow transmission of sophisticated graphics and video images to small devices, Jane Zweig, an analyst with Herschel Shosteck Associates in Washington D.C., told The Associated Press.

``I think the Internet world recognizes that wireless will be a very important segment to their business and the wireless world needs to get a much better understanding and foothold in the Internet world,'' she said.

NetZero has been able to attract some top-name partners in the past few months. In January, the company signed a $100 million partnership with General Motors.