Beleaguered kit vendor Motorola has made an about face on last year’s decision to drop Qualcomm from its suppliers list.

On Wednesday the US handset and equipment vendor said that it is once again broadening its relationship with Qualcomm, with the aim of designing the big Q’s chipsets into certain UMTS 3G handsets from the end of this year.

The news is a bit of a turnaround for Qualcomm. In September, telecoms.com learned that Motorola had removed the US chip vendor from its 3G suppliers list.

At the time, Moto was believed to be shifting its business to its own chipset spin off, Freescale Semiconductor, but in the long run, Texas Instruments was reportedly set up to get the contract. Over the past couple of years, Qualcomm has been involved in volatile legal wrangling over patent infringements in its 3G chips – a situation which its rivals have exploited.

However, all that seems to be water under the bridge as Alain Mutricy, senior vice president for platform technology at Motorola’s Mobile Devices business, said of the deal, “Qualcomm is a valued supplier and I am excited about the UMTS opportunities we are pursuing together. This agreement represents a further step in the execution of our silicon strategy.”

But that was all the good news to be had, as Motorola published some shocking financials on Wednesday.

For the final quarter of 2007 profits fell from $623m a year ago to $100m, with net revenues falling from $11.8bn to $9.6bn in the same period.

Again, the Mobile Devices segment was the culprit behind the decline, with fourth quarter sales down 38 per cent to $4.8bn and operating loss dropping to $388m, compared with operating earnings of $341million in the year ago quarter. During the last three months of 2007, the company shipped 40.9 million handsets.

For the full year, Motorola recorded a net loss of $49m, compared to a profit of 3.6bn in 2006.