Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
From Morningstar:QUALCOMM IS POISED TO BENEFIT FROM THE TRANSITION TO NEXT-GENERATION WIRELESS TECHNOLOGIES
Courtesy of ms_1585 from the Yahoo QCOM Board
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4686818&tid=qcom&sid=468...
Qualcomm's 'Very Attractive' Valuation
02.24.05, 9:24 AM ET
Banc of America Securities reiterated a "buy" rating and $49 price target on Qualcomm (nasdaq: QCOM - news - people ), noting that sales of CDMA handset units worldwide are tracking "roughly in line, with 3G solid." Banc of America said, "We are encouraged that 3G units are tracking to our 8 million phone estimate for [the quarter ending] March. Our 3G model shows a doubling of units in 2005 and 2006. We see this as the key reason to own the stock, since it will drive upside in 2006." The research firm noted that Qualcomm trades at less than 20-times calendar 2006 earning per share after accounting for cash. "We see this as a very attractive multiple for a company with this margin, cash flow, and growth profile," Banc of America said. In its coverage of wireless equipment, Banc of America's top two picks are Qualcomm and Nokia (nyse: NOK - news - people ), which is rated at "buy" with a $20 price target. The firm's two least favorites are Ciena (nasdaq: CIEN - news - people ) and Lucent Technologies (nyse: LU - news - people ), both rated at "neutral" with respective price targets of $2.50 and $3.50.
http://www.forbes.com/markets/2005/02/24/0224automarketscan02.html?partner=yahoo&referrer=
Qualcomm plans mobile TV offensive
By Junko Yoshida
EE Times
Feb 18, 2005
CANNES, France — Qualcomm Inc. said it will launch its proprietary MediaFLO mobile TV technology in the U.S. this year with an eye toward making it an international standard.
The move, announced at this week's 3GSM World Congress here, pits Qualcomm (San Diego) against the European DVB-H (Digital Video Broadcast-Handheld) and T-DMB (Terrestrial-Digital Mobile Broadcast) specs.
Jeffery Lorbeck, vice president and general manager for MediaFLO at Qualcomm, told EE Times that MediaFLO has attracted a surprising amount of interest from European operators. "We are not sure if this is just a due-diligence thing, but we are listening," he said.
Qualcomm is assembling an industry consortium around the technology, said Lorbeck. The next step is to submit its technolgy to a standards organization for apprival as an international spec.
Armed with MediaFLO and 700 MHz of spectrum won in a 2003 U.S. spectrum auction, Qualcomm is set to become wholesale distributor of a U.S. "mediacast" network. Late last fall, it established a subsidiary called MediaFLO USA to help third-generation cellular network operators deliver low-cost, high-quality audio and video programs to consumers.
Qualcomm's next objective is the European market. Claiming there is nothing within its technology specifically tied to its proprietary CDMA technology, Omar Javaid, senior director of international business for MediaFLO, said, "We have global ambitions."
Javid called competing DVB-H and T-DMB technologies "not bad" for bringing TV to mobiles, but added, "Those other technologies are mobile extensions of existing terrestrial standards. They carry legacies. They have issues with power, mobility and air interfaces."
Qualcomm began MediaFLO development two and half years ago "from a clean slate, with lots of modern enhancements," said Javid. Such improvements include adoption of Turbo codes — which deliver a gain of 1 to 2 dB — and a layered modulation scheme for graceful degradation of mobile TV reception. Besides real-time streaming capabilities, MediaFLO also offers "clip casting" that sends files in the background during off-peak hours and caches them on a device.
Qualcomm's Lorbeck said, "I am sure if a company like Nokia threw in their brightest engineers to develop a brand new [TV-on-mobile] technology, they would have come up with something very similar to our FLO technology." Lorbeck described MediaFLO as an optimal mediacast network technology "without the constraints of the underlying network."
Qualcomm said it developed the entire MediaFLO food chain, including chip sets, software and network architecture.
That's not necessarily good news for rivals. Will Strauss, president of Forward Concepts (Tempe, Ariz.), said Qualcomm has the credibility to run a network because of its experience with its Omnitrack system for tracking truck fleets. "But it's yet another proprietary technology that nobody else is going to play with," added Strauss, referring to CDMA technology which created virtually no silicon market for chip vendors other than Qualcomm.
If MediaFLO enjoys any critical advantage, it's simplicity. MediaFLO was designed specifically for cellular network operators, with no TV or radio broadcasters involved. DVB-H-based mobile TV services initially depend on two separate networks — terrestrial broadcast and mobile networks. This dual-network structure may trouble mobile network operators who want a large, straightforward return on their investment. "MediaFLO offers TV-like functions but it's not a TV broadcast," claimed Javid.
http://www.commsdesign.com/news/market_news/showArticle.jhtml?articleID=60402056
Cisco to buy Nokia Enterprise?
Best rumour from 3GSM Cannes
By Tony Dennis at GSM Cannes: Thursday 17 February 2005, 11:20
THERE WERE SOME cracking rumours doing the rounds @ the last 3GSM show to be held in Cannes. (Barcelona 2006 here we come!). One of them is that Cisco is sniffing around Nokia.
Nokia has long been a mid-tier player in the cellular infrastructure market. That's an area where Cisco misses out. Better still if it goes for Nokia, it also gets a built in European presence.
And with IP based backhaul networks becoming de rigeur for 3G networks, Nokia's customer base would be just the sort of network operators which Cisco would want to target.
Better still with an American like Mary McDowell in charge of the Enterprise division @ Nokia, want better way to broker a deal to sell its infrastructure business off? Second great rumour is that Qualcomm was talking directly to British network operator, O2. The INQ spotted Qualcomm chairman, Dr Irwin Jacobs, boarding O2's yacht with a considerable posse in tow. And O2's Peter Erskine was there too.
What could they be talking about? HSDPA is the INQ's guess. Every HSDPA (sometimes known as Superfast 3G) PC Card that the INQ can think of, utilises Qualcomm's chips. Even the recently announced card from Siemens along with Sierra Wireless, Novatel and Option.
Since O2 is dead keen to get a lead in HSDPA, why not speak to the source rather than go through an intermediary?
Incidentally, O2 has just fine tuned its 3G network with help from Areso. Its Areso's first big deal. And where did the Areso team come from? Vodafone. Whoops. µ
http://www.theinquirer.net/?article=21309
Riviera Roundup
02.17.05
CANNES, France -- 3GSM Congress -- As 40,000 radio heads pack their bags and evacuate Cannes, Unstrung picks its finest tidbits from this year’s annual wireless shmoozefest.
Quote of the week
“What’s going for us in Europe is that we aren’t Qualcomm. We are the alternative to Qualcomm:" Ronny Haraldsvik, VP global communications and marketing, Flarion Technologies, referring to Qualcomm’s rumored 4 to 5 percent royalty charge on every CDMA-based technology deployment.
The Flash-OFDM vendor spent the week promising that 2005 will be the year of commercialization for its technology in Europe. “We will have at least one nationwide commercial deployment this year,” said Joe Barrett, EMEA marketing director. Potential customers include T-Mobile International AG in Germany (see T-Mobile Favors Flarion ).
The company is also “working through several different standards processes," according to Haraldsvik. An original supporter of the Institute of Electrical and Electronics Engineers Inc. (IEEE)'s 802.20 specification, Haraldsvik raised eyebrows by declaring “that’s probably not where you will see us become a standard first.” (See Enter the MAN Haters.)
GSM Body Mutes Qualcomm?
Mischievous sources tell Unstrung that the group behind the 3GSM event -- the GSM Association -- has barred CDMA stalwart Qualcomm from any speaker participation at the conference. Scuttlebutt suggests the association is concerned over the vendor’s stranglehold on CDMA technology, the traditional rival to the European GSM cellular standard.
The GSM Association has been quick to deny any such practice. “That’s fundamentally not true,” says a spokesman. “We see Qualcomm as a huge supporter of W-CDMA.”
Ou est la IPWireless?
UMTS-TDD vendor IPWireless Inc. kept a strangely subdued presence at this week’s event. Traditionally not one to miss a marketing opportunity, the alternative infrastructure company was notable by its absence in the main exhibition halls, opting instead to cozy up at the “Global UMTS TDD Alliance Showcase” in a local hotel.
David vs Goliath
A couple of deals from Europe’s vendor minnows caught Unstrung’s attention this week, hidden amongst the mountain of "news" releases spewed out by vendors. Spanish data services platform startup NetSpira Networks SL unveiled a customer win at Singaporean carrier MobileOne Ltd. (M1) (Singapore: MONE - message board), taking its tally of announced deals to six (see NetSpira, Lucent Win Billing Contract and Czechs Czoose NetSpira). Meanwhile tiny network optimization company Arieso Ltd. backed up its previous grandiose claims with a win at U.K. carrier mmO2 plc (NYSE/London: OOM - message board) (see O2 Chooses Arieso and Arieso Shouts Off).
Next stop, Barcelona, Spain 2006. Olé!
— Justin Springham, Senior Editor, Europe, Unstrung
http://www.unstrung.com/document.asp?doc_id=68353
CEO in line for $460m if he sells the company
By Heather Tomlinson
London
February 18, 2005
An executive pay scheme that would make the fattest of fat cats blush is to be voted on by shareholders of US technology company Qualcomm next month.
Under the plan, the chief executive would receive $US360 million ($A459 million) if the business was taken over.
Irwin Jacobs is sitting on share options worth $US360 million, and he would get all that in the event of a takeover, according to pay consultants PIRC, which described the remuneration as "a licence to print money".
Qualcomm, involved in wireless 3G technology, had revenue of $US4.9 billion last year.
In Britain, shareholders would oppose such exorbitant payouts, but investor activism in the US appears in its infancy. New York Stock Exchange chief executive Richard Grasso got $US140 million on leaving. Disney's Michael Ovitz pocketed $US140 million.
PIRC's research, released on Wednesday, highlights the unknown performance targets at Qualcomm, the substantial salaries and the vesting of options a year after they were granted.
Advertisement
Advertisement"The company's pay structure must be considered a licence to print money," said the shareholder advisory group. "PIRC considers that such a liability adds substantially to the cost of bidding for the company and further entrenches the board."
Dr Jacobs, a former engineering professor, started Qualcomm in the late '80s and holds many patents on wireless technology. He took home a $US1 million salary and a $US1.7 million cash bonus last year and was awarded an extra 500,000 options, according to company filings in the US.
"The (compensation) committee believes Dr Jacobs' compensation is appropriate, given the positive company performance," Qualcomm said. Profit nearly doubled to $US1.7 billion. The committee said the profitable growth and factors such as "leadership, ethics and corporate governance" had influenced their decision.
- Guardian
http://www.theage.com.au/news/Business/CEO-in-line-for-460m-if-he-sells-the-company/2005/02/17/11086....
The Next Monopoly
As the 3G revolution picks up steam, wireless pioneer Qualcomm may be poised for market dominance that even Bill Gates would envy.
By Om Malik, February 16, 2005
The professor couldn't sleep. Again. For six months he had been traveling tirelessly from his home in San Diego to Kansas, pitching a radical new cell-phone technology to telecom giant Sprint. Sprint executives at first told the professor he was nuts. But they humored him, and he kept visiting, each time a little more desperate. On the eve of yet another flight to Kansas, the professor awoke, shaking. He slipped on a bathrobe and began to pace the living room floor in the dark.
He has slept better since -- and now may be about to pull off a business coup that few could dream of. The professor was Irwin Jacobs, co-founder and chief executive of Qualcomm (QCOM). The immediate result of that 1993 trip was that Sprint decided to gamble on Jacobs's technology, a move that, over the next several years, converted Qualcomm from an unknown upstart into a major telecom player. But only now is the more dramatic impact coming into focus. Sprint recently announced a $36 billion merger with Nextel (NXTL). And, largely as a result of Jacobs's decade-plus association with Sprint, the biggest winner in that deal may well be Qualcomm.
Here's how: The Sprint-Nextel merger will speed up the combined company's rollout of a 3G (third-generation) network that will allow people to do wondrous things with cell phones, from downloading TV-quality video to hearing Green Day's American Idiot loud and clear. Qualcomm chips and other technologies will be at the heart of the phones people will use on Sprint's 3G network. Nextel hasn't used any Qualcomm technology to date; when the merger is done, any of the 15.3 million current Nextel customers who want to go 3G will have to buy new phones with Qualcomm technology in them. There's no way around it -- and it will mean tens of millions of dollars for Qualcomm in just the first year after the merger.
More broadly, the deal fortifies a market position that could give Qualcomm an incredibly lucrative -- perhaps dominant -- role in the coming world of souped-up wireless communications. The 3G revolution has been hyped forever, but this year, analysts say, it is finally starting to arrive. By year's end there will be an estimated 52 million 3G phones, double today's figure. By the end of 2008, there will be an estimated 352 million, and explosive growth is expected for years thereafter. Qualcomm doesn't manufacture phones, yet it will make money on every single 3G handset sold. That's because Qualcomm controls patents that make its chips, software, or other technologies vital in the functioning of 3G -- no matter which of the competing standards or technical approaches phone makers and carriers adopt for their new networks. Every time a customer of Sprint, or any other carrier that has fully embraced Qualcomm technology, buys a 3G phone, Qualcomm will get roughly $20. Every time giants like Nokia and others in its camp, which don't particularly like Jacobs and Qualcomm, sell a phone, they have to pay Qualcomm at least nine bucks. Do the math. "Qualcomm squeezes money at every pressure point in the 3G food chain," one competitor says.
COLLECT $2 BILLION
Qualcomm is poised to rake in enormous profits during the next phase of the wireless revolution.
BIG TODAY
Qualcomm technology already underpins many cell phones.
BIGGER TOMORROW
The number of advanced 3G phones is expected to surge.
It is a sweet arrangement, and it's testimony to Jacobs's unusual combination of sheer perseverance, business savvy, and technical brilliance -- he taught electrical engineering at MIT before becoming an entrepreneur, and he holds 12 patents in his own name. Once dismissed as something of a crackpot, Jacobs increasingly is seen as one of the great innovators of his time. As a businessman, his record speaks for itself: Qualcomm had a 2004 profit of $1.7 billion, more than double the 2003 figure -- even without the big boost from 3G that seems imminent. The company's 2004 net profit margin was a staggering 36 percent, richer than that of almost any other public company its size or bigger. By comparison, Microsoft's (MSFT) net margin last year was 18 percent.
Qualcomm could still face plenty of static. Its rivals, including most of the telecom giants, are all trying to figure out new high-speed technologies that might loosen its grip. And the company's stock was blasted recently when its first-quarter earnings growth of 25 percent fell shy of some analysts' 3G-fueled expectations. But if just a few things break its way, Qualcomm has a chance to become something truly special -- and perhaps a bit frightening to some people. "The wireless Wintel" is how some telecom insiders put it.
No one, not even Jacobs, could've imagined such a thing at Qualcomm's birth. Jacobs started the company in his den in 1985 to pursue his interest in an obscure technology called code division multiple access, or CDMA. At the time, its best-known characteristic might have been that Hedy Lamarr -- yes, that Hedy Lamarr -- held an early patent on the approach. Put simply, CDMA is a way to split a radio signal into packets of information, shoot them into the ether, and reassemble them when they reach their destination. When Qualcomm was launched, the telecom industry was already planning its initial switch from analog to digital -- but almost no one other than Jacobs thought CDMA could play a role. The big telecoms were betting almost exclusively on a different technological standard.
As Qualcomm engineers built on CDMA, Jacobs became its traveling evangelist. It was a tough sell, and not just in Kansas. In 1989, Jacobs invited executives of all the big wireless players to his office, hoping to demonstrate the glories of CDMA. To this day, few outside Jacobs's inner circle realize how close to total disaster he came at that meeting.
PATENTLY OBVIOUS
Qualcomm's patents mean it makes money on every 3G handset, regardless of which technical standard it uses.
TECHNOLOGY CDMA
(controlled by Qualcomm) W-CDMA
(partially controlled by Qualcomm)
MAJOR BACKERS SK Telecom (Korea), Sprint, Verizon Cingular, Ericsson, Nokia, Vodafone
QUALCOMM PROFIT PER PHONE $20 $9-$20
Jacobs was scheduled to give a 30-minute talk, capped by a live CDMA phone call. But just before the big moment, a lieutenant signaled Jacobs to keep talking -- the system, an almost comically jury-rigged thing, wasn't working. It turned out that making the call depended on connecting with a satellite; Qualcomm engineers could not make that happen. As the frantic engineers drove around San Diego County in a van with a satellite dish on top in search of a signal, Jacobs played for time. "Luckily, being an old college professor, I was able to keep blabbing for an hour and 15 minutes," he recalls. At last the call got through -- and Qualcomm had made another narrow escape.
MONEY MACHINE
The lucrative position is already bolstering Qualcomm's profits.
SHARING THE WEALTH
Qualcomm stock has surged since bottoming out in 2002.
Sources: CDMA Development Group; First Global; Harris Nesbitt; In-Stat/MDR; Qualcomm
Over time Jacobs and his engineers came up with patent after patent on CDMA. Buoyed by the Sprint win of the early '90s, Jacobs traveled the world in search of customers. Big carriers like Verizon (VZ) and Alltel, which has 10 million customers mostly in rural America, signed on. But Jacobs's greatest scores came overseas: CDMA went live in South Korea in 1996 and China in 2002. In 2003 he landed a deal with Reliance Infocomm, India's largest wireless operator. By the end of the decade, analysts figure there'll be 70 million people on CDMA networks in India. Jacobs still works the territory: On a recent trip to Rajasthan in northern India, he saw a disabled man pulling a ricksha and carrying a mobile handset, stopping outside shanties to ask people if they wanted to make a call. It was a CDMA phone. "That to me was a telecom success story," Jacobs says.
If it did nothing more than develop technologies for the current generation of CDMA -- call it 2G -- Qualcomm would be in an enviable position. There are more than 240 million phones for CDMA networks now, and not all of the users will swiftly move to new high-speed networks. Indeed, places like China and Russia are still building out 2G CDMA networks; analysts expect roughly 500 million 2G CDMA phones to be in use by 2010. That will mean billions of dollars for Qualcomm going forward, much of it from selling chips to phone makers like Samsung, the global leader in CDMA phones. It bought more than $500 million of Qualcomm chips last year.
But the real game is 3G -- a contest in which there are now two competitors. One is a turbocharged version of the current CDMA and is controlled almost entirely by Qualcomm; the company makes the chips and operating systems for all phones whose networks will use it. About 12 million of the world's phones employ 3G CDMA, and the number is rising smartly. SK Telecom, Korea's largest carrier with 18 million customers, uses Qualcomm's 3G standard. So does Japan's KDDI, which has 18.9 million customers. Alltel, Sprint, and Verizon -- three of the five largest U.S. wireless networks -- are likely to use Qualcomm 3G technology almost exclusively. All told, they're expected to have more than 90 million customers by year's end.
The bigger pool of potential 3G callers will use another alphabet soup of a wireless standard: W-CDMA. (The W stands for "wideband.") It's backed by most of the world's telecom elite, including Nokia (NOK), Ericsson (ERICY), Cingular (America's biggest mobile carrier), and Vodafone (VOD) (the world's biggest). That camp has 1.2 billion 2G customers, more than four times as many as Qualcomm's 2G. Bad news for Qualcomm? Hardly. Qualcomm controls key patents on some of the technologies behind W-CDMA. As that giant herd of customers migrates to 3G, Qualcomm stands to rake in money -- not as much per customer as on its own 3G standard but, given the hundreds of millions of potential customers, a big pile nonetheless.
FIGHTING BACK
How competitors are trying to thwart Qualcomm.
Qualcomm's stranglehold on 3G has made it plenty of enemies; one rival executive calls the company the John Gotti of telecom. Competitors are scrambling to undermine Qualcomm -- and to make sure it doesn't grab a similar lock on future wireless technologies.
Qualcomm controls patents on about 15 percent of the technology for W-CDMA, which is backed by rivals like Cingular, Ericsson, and Nokia and has a huge potential market. Qualcomm hopes to own half of that market by selling chips to phone makers, but Nokia is building its own chips with help from Texas Instruments.
Sweden's Ericsson has already grabbed 30 percent of the W-CDMA chip market. Sony and 13 other handset makers use the Ericsson chip; so far Qualcomm has five big customers. Ericsson's chip is about 25 percent cheaper than Qualcomm's.
Other competitors, however, have essentially given up on making a stand against Qualcomm in 3G. They're mapping out plans for the next big wireless shift, to 4G. Flarion Technologies, a startup founded by a former Bell Labs researcher, is working on a technology that could be five times faster than current 3G. Fujitsu, Intel, wireless pioneer Craig McCaw, and others are experimenting with a high-speed technology called Wi-Max. It, too, remains largely theoretical, but the goal is concrete: "Nobody," one executive says, "wants to see Qualcomm in control again."
Getting a piece of that W-CDMA standard was the finishing touch on Qualcomm's heads-I-win, tails-I-win coup. How Jacobs pulled it off underscores his wiliness -- and toughness. Many of the big telecom players, particularly Nokia, had hoped to create Qualcomm-free 3G. But Jacobs, armed with his patent portfolio, threatened a legal siege. He called on his platoon of lobbyists -- he employs several full-time and uses three outside firms -- and, if the stories are to be believed, got politicians and the U.S. government to pressure Qualcomm's rivals. Many in telecom have called that period Jacobs's "holy war" phase. He won't talk about the details of the combat, but when W-CDMA equipment hit the market in 2001, Qualcomm had its slice.
One thing about owning the catbird seat: You can't just sit there. Qualcomm is trying to press its advantage through Brew, its cell-phone operating system. Brew (binary runtime environment for wireless, if you must know) rolled out in 2001 and was aimed at soothing a long-standing peeve of the carriers: that handset makers, by controlling the OS, define user interfaces and what content can be accessed by phone. Carriers want to control that themselves -- largely so they can charge customers every time they, say, use their phones to buy something off the Web. Qualcomm tailors Brew to carriers' specifications and typically takes only a percentage of the fees that carriers charge customers for Web transactions. Nokia's operating systems are still by far the biggest in the industry, but Brew is gaining ground. Phones that carry the Verizon brand, for instance, run on Brew. Qualcomm sold roughly 26 million copies of Brew last year, twice the 2003 figure. "Carriers love Brew because it allows them to create a walled garden and lock out everyone who doesn't pay," says one telecom executive
Brew also exemplifies Qualcomm's most exalted corporate principle: Love thy carrier. "We never forget that the carrier owns the customer," says Qualcomm president Paul Jacobs, one of Irwin's two sons who are at the company. The carriers, of course, determine which standard will be used in their 3G networks; they can also lean on phone makers to use Qualcomm chips. Thus Qualcomm goes out of its way to romance carriers. For instance, carriers want to pump video to 3G phones but worry that the huge files could gum up even high-capacity networks. Qualcomm's solution? It's spending $800 million to build a parallel network, called MediaFlo, for streaming video to phones that contain a special Qualcomm chip. The carriers will charge their customers for the service, but Qualcomm mainly makes money by selling the specialized chip to phone makers.
The potential payoff from these initiatives is eye-popping. Through all the royalties, chip sales, and payments for other technology -- at current prices and under today's licensing deals -- Qualcomm earns about $20 for each 3G CDMA phone sold that uses Qualcomm's standard. On sales of 3G phones that use the competing standard, analysts estimate that the very least Qualcomm can make is about $9. Some industry experts believe that the company could control more than half of the CDMA market. That's why analysts project that Qualcomm's revenue in 2006 will hit $7.1 billion -- 45 percent higher than in 2004 -- and that profit will surge 47 percent to $2.53 billion.
THE 3G ECONOMY
By the end of 2007, there will be 200 million 3G phones worldwide, creating rich new opportunities for startups and established players alike. Here are four potentially hot sectors.
Apps
OPPORTUNITY: Web surfing, instant messaging, and other tasks will migrate to high-speed phones, requiring scads of new software.
PLAYER TO WATCH: Norway's Opera Software leads the cell-phone browser market, thanks to deals with handset makers like Nokia and Sony Ericsson.
CONTENDERS: Agile, Profimail
ESTIMATED MARKET SIZE, 2007: $1 billion
Games
OPPORTUNITY: Millions of people will use phones with high-speed connections and 3-D graphics as game consoles.
PLAYER TO WATCH: Mforma, based in Kirkland, Wash., already provides games and content to more than 100 carriers worldwide and has attracted $63 million in venture capital to fund its expansion.
CONTENDERS: Digital Chocolate, Jamdat, Sorrent
ESTIMATED MARKET SIZE, 2007: $7.4 billion
Music
OPPORTUNITY: High-speed 3G connections will spur consumers to download and listen to music on cell phones rather than iPods, radios, or other portable devices.
PLAYER TO WATCH: Musiwave, a French startup, delivers tunes from publishers EMI and SonyBMG; through carriers like Vodafone, Musiwave allows users to download full songs with hi-fi sound quality.
CONTENDERS: Melodeo, Sony StreamMan
ESTIMATED MARKET SIZE, 2007: $1.7 billion
Video
OPPORTUNITY: Mobile video is a potential killer app for 3G networks. In Japan, mobile video is now widespread; the rest of the world won't be far behind.
PLAYER TO WATCH: Mobliss, based in Seattle, just launched Thumbdance, a wireless video channel that broadcasts animated shorts and other content.
CONTENDERS: Idetic, Qualcomm MediaFlo
ESTIMATED MARKET SIZE, 2007: $800 million
Sources: ARC Group; Strategy Analytics; ThinkEquity
It's also why, on a recent day at Qualcomm, Paul Jacobs is talking a little smack. "Everybody used to say, 'You're the Betamax of cellular,'" Jacobs says, harking back to the days when many predicted that CDMA would be crushed by other technologies. "Guess what: It didn't turn out that way. Now the question we hear is, 'How much of the value chain can you occupy?'" When you factor in 3G, the answer is simple: virtually all of it.
The wireless industry has a history of surprise twists and sudden reversals -- remember when Motorola's (MOT) Iridium was going to rule mobile communications? Any number of things could slow down Qualcomm: a sluggish move to 3G phones, breakout technology that leapfrogs Qualcomm (see "Fighting Back"), management blunders. In the near term, some observers have suggested that Qualcomm markets like India and China are losing steam. That's one reason Qualcomm stock -- one of 2004's hottest performers, up 60 percent for the year -- tumbled nearly 10 percent in one day in mid-January and has hovered at about $35 a share since. Some analysts, recalling that Qualcomm shares collapsed from $180 to $15 after the Internet bubble burst, think Wall Street may still be overvaluing the company. "The good news about 3G is already reflected in the stock," says Sachin Salgaonkar, an analyst at research firm First Global.
Jacobs, of course, has heard the skeptics before. In 1994, esteemed Stanford professors were writing papers proving conclusively that Qualcomm's vision of CDMA was, given the laws of physics, "impossible." Today, equally esteemed people marvel at what Jacobs has done. "He'll go down as one of the great business innovators of his era," says Martin Cooper, who invented the cell phone as a Motorola engineer.
Jacobs says he's too busy to be thinking much about legacies. He still spends a quarter of his time on the road, and his mind is constantly working on technical puzzles. At age 71, he says he has no plans to retire. He even still has a sleepless night from time to time. Recently, just back from talks with telecoms about new chip designs, he bolted upright in bed before dawn, wondering how in the world he'd get that chip delivered on time.
Somehow, you get the feeling the professor will figure it out -- and his competitors will be the ones losing sleep.
http://www.business2.com/b2/web/articles/0,17863,1026579,00.html?promoid=yahoo
Banc of America's top "buy"-rated picks in wireless equipment are Nokia and Qualcomm (nasdaq: QCOM - news - people ), with a $49 price target.
http://www.forbes.com/markets/2005/02/11/0211automarketscan06.html?partner=yahoo&referrer=
Nokia Set For Upside With New Handsets
02.11.05, 11:43 AM ET
Banc of America Securities maintained a "buy" rating for Nokia (nyse: NOK - news - people ) and said the maker of cell phones is set to see rising sales on the introduction of 10 new handsets in 2005. "Our view on the shares remains very positive given the strong handset market, improving product portfolio, and increased stock repurchase program," Banc of America said. The research firm has a price target of $20 for Nokia and expects new phone models to drive first-quarter sales growth. "Market share in the second half of 2005 will depend on the success of phone introductions, which we expect to be weighted towards the second quarter," it said. "If Nokia's new products are successful, we see upside to 2005 sales and earnings per share." Banc of America's top "buy"-rated picks in wireless equipment are Nokia and Qualcomm (nasdaq: QCOM - news - people ), with a $49 price target; its least favorite picks, rated at "neutral," are Ciena (nasdaq: CIEN - news - people ), with a price target of $2.50, and Lucent Technologies (nyse: LU - news - people ), with a target price of $3.50.
QUALCOMM: Outlook
Webbolt Business News (subscription), Canada - 22 minutes ago
SUMMARY: Consumers and enterprises worldwide are attracted by and benefiting from an increasing range of entertaining and useful applications. ...
No detail, subscription needed.
http://webbolt.ecnext.com/coms2/description_42889_QUALCOMM250105_COR
Qualcomm "long term buy"
Tuesday, January 25, 2005 3:55:55 AM ET
Hilliard Lyons
NEW YORK, January 25 (newratings.com) - Analyst Tom Carpenter of Hilliard Lyons reiterates his "long term buy" rating on Qualcomm Incorporated (QCOM.NAS). The target price is set to $47.
In a research note published yesterday, the analyst mentions that the company has announced its F2Q05 guidance short of the consensus, despite having reported robust results for F1Q05. Qualcomm expects its EPS to accelerate in F2H05, the analyst says. The company is benefiting significantly from the rapid growth of the 3G CDMA 2000 and WCDMA markets, Hilliard Lyons adds. The analyst expects the company's royalty revenues to increase significantly during 2006.
http://www.newratings.com/analyst_news/article_664529.html
Sprint-Nextel Deal a Boon to Qualcomm
http://www.rednova.com/news/display/?id=121379
Qualcomm "outperform,"estimates raised,target $50
Friday, January 21, 2005 6:30:14 AM ET
RBC Capital Markets
NEW YORK, January 21 (newratings.com) – Analyst Satya Chillara of RBC Capital Markets reiterates his "outperform" rating on Qualcomm (QCOM.NAS). The target price is set to $50.
In a research note published yesterday, the analyst mentions that Qualcomm reported its 1Q FY05 earnings and revenues marginally ahead of the estimates. RBC Capital Markets expects the company to witness robust WCDMA chipset shipment growth in 1H05. The EPS estimate for FY05 has been raised from $1.14 to $1.16.
http://www.newratings.com/analyst_news/article_660463.html
Qualcomm "overweight", Target $48.
Friday, January 21, 2005 7:33:46 AM ET
Prudential Financial
NEW YORK, January 21 (newratings.com) - Analyst Inder M Singh of Prudential Financial reiterates his "overweight" rating on Qualcomm (QCOM.NAS). The target price is set to $48.
Most popular stories:
Pfizer "strong buy," target price reduced - update 6:29am
Macromedia upgraded to "strong buy" 4:17am
eBay downgraded to "hold" - update 6:56am
Pfizer asked for additional Celebrex data by EMEA 4:48am
Nortel targets Chinese cellular market with 3G joint venture - update 1 4:19am
more...
In a research note published yesterday, the analyst mentions that the company reported its 1Q05 EPS ahead of the consensus and the guidance, while its pro forma sales were in-line with the pre-announcement. Qualcomm witnessed capacity constraints on RF components during the quarter and expects to resolve these issues in the forthcoming weeks, the analyst says. Prudential Financial believes that WCDMA demand would be the key driver for the company's growth in the near term.
http://www.newratings.com/analyst_news/article_660510.html
Qualcomm Set For Better Second Half
01.20.05, 9:09 AM ET
Banc of America Securities maintained a "buy" rating and $49 target price on Qualcomm (nasdaq: QCOM - news - people ), saying fiscal first-quarter results "were mostly in-line with our views, but March guidance was weak based primarily on lower handset shipments." The research firm lowered the fiscal 2005 earnings-per-share estimate on Qualcomm to $1.17 on revenue of $6.0 billion, from earnings of $1.22 per share on revenue of $6.1 billion. Banc of America said it sees a better second half for Qualcomm based on higher average selling prices and chipset gains. "We see Qualcomm as a core technology holding since there is a clear secular driver that is leading to accelerating earnings-per-share growth," Banc of America said. The research firm said it views the current weakness in the stock as a buying opportunity and reiterated the fiscal 2006 earnings-per-share estimate of $1.54 on revenue of $7.6 billion. In the wireless equipment sector, Banc of America's top picks are Qualcomm and Nokia (nyse: NOK - news - people ), which is rated at "buy" with a $18 target price. Its least favorite picks are Ciena (nasdaq: CIEN - news - people ) and Lucent Technologies (nyse: LU - news - people ), both rated "neutral" with target prices of $2.50 and $3.50, respectively.
http://www.forbes.com/markets/2005/01/20/0120automarketscan01.html?partner=yahoo&referrer=
CDMA2000 technologies set the pace for 3G
December 21, 2004
http://www.3gnewsroom.com/3g_news/dec_04/news_5332.shtml
During the ninth annual 3G World Congress & Exhibition, held in November in Hong Kong, the CDMA Development Group (CDG) and wireless industry leaders demonstrated that 3G is here, with more than 160 operators and 140 million users across Asia, Europe, North America and Latin America. This year's Congress featured 3G CDMA technologies, including CDMA2000, TD-SCDMA and WCDMA, and focused on market opportunities and future technology evolution. More than 7,000 delegates from around the world participated in workshops, attended panels and presentations and visited exhibits from the world's leading wireless carriers, infrastructure vendors, device manufacturers, solution providers and content developers.
"The commercial success of CDMA2000 is proof of the tremendous potential for 3G," said Perry LaForge, executive director of the CDG. "3G CDMA technologies are transforming the telecommunication market allowing carriers to provide affordable voice services in underserved areas, drive the convergence of fixed telephony with wireless, and enable the introduction of new advanced data services. CDMA2000 is leading, and will continue to lead, in this evolution."
CDMA2000 dominates the 3G market today with rapid deployments, an expanding subscriber base and the introduction of high-speed data technologies. There are over 100 CDMA2000 operators providing advanced 3G services to more than 127 million users in 50 countries around the world, including developing markets such as India, China and Latin America. The base is growing at 5 million new users per month, exceeding many analysts' forecasts. CDMA2000 operators lead in the introduction of high-speed data technologies. 17 operators have deployed CDMA2000 1xEV-DO, which constantly delivers 300-600 Kbps and sometimes up to 2.4 Mbps data rates in commercial networks. With future enhancements, 1xEV-DO will offer Voice over IP (VoIP) as well as increased uplink data speeds which will support new 3G services such as video telephony.
A number CDG member companies made announcements at the Congress. Telstra in Australia announced the rollout of its CDMA2000 1xEV-DO network. Verizon Wireless formed a partnership with SK Telecom to offer ringback tones in North America, and Sprint launched Research In Motion's BlackBerry handset. Qualcomm announced that major infrastructure vendors, including Airvana, Ericsson, Hitachi, Ltd., Lucent Technologies, Motorola, Nortel Networks and Samsung joined forces to develop CDMA2000 1xEV-DO Revision A network solutions.
Qualcomm after hours was 44.75 @6:37PM ET
Symbol Time* Trade* Change* After Hrs Chg* Bid* Ask*
QCOM 6:37PM ET 44.75 +1.81 (4.22%) 0.77 (1.75%) 44.70 44.78
QUALCOMM Updates Financial Guidance for the First Fiscal Quarter of 2005 Ending December 26, 2004
Tuesday December 21, 6:03 pm ET
http://biz.yahoo.com/prnews/041221/latu083_1.html
SAN DIEGO, Dec. 21 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM - News) today updated its financial guidance for the first fiscal quarter ending December 26, 2004.
The following statements are forward looking and actual results may differ materially. Please see the description of certain risk factors in this release and QUALCOMM's reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks.
Based on the current business outlook, we now anticipate first fiscal quarter revenues excluding the QUALCOMM Strategic Initiatives (QSI) segment to be approximately $1.4 billion, the high end of our prior guidance. We now anticipate first fiscal quarter diluted earnings per share excluding the QSI segment to be approximately $0.26-$0.27. This estimate is based on the shipment of approximately 39 million MSM phone chips during the quarter.
On November 3, 2004, we estimated first fiscal quarter revenues excluding the QSI segment to be in the range of approximately $1.3 to $1.4 billion, an increase of approximately 12 to 23 percent year over year assuming application of the "New Method"(1) of estimating royalties for the first fiscal quarter of 2004. We had anticipated first fiscal quarter diluted earnings per share excluding QSI to be approximately $0.24-$0.26, compared to $0.23 in the year ago quarter. We had estimated shipments of approximately 38 to 39 million MSM phone chips compared to 39 million in the prior quarter and 32 million in the year ago quarter.
Royalty reports from our licensees, received in the first fiscal quarter for CDMA products sold in our fourth fiscal quarter ended September 26, 2004, indicate sales of approximately 40 million new CDMA/WCDMA units compared to our prior estimate of approximately 41 million units. These royalty reports also indicate that the average selling price of new CDMA/WCDMA units was approximately $212, compared to our prior estimate of approximately $213.
"3G CDMA continues to grow worldwide at a rapid pace," said Dr. Irwin Mark Jacobs, chairman and CEO, QUALCOMM. "Reports from our licensees indicate that infrastructure sales were particularly strong in the September quarter. Driving these results were new deployments and phones and expansions to existing CDMA2000 1xEV-DO networks. In addition, WCDMA deployments continue and recent favorable results from Hutchison's 3 service demonstrate that operators can leverage high-speed data, greater capacity and resulting lower costs to speed transition of subscribers to third- generation networks."
"Clearly, this worldwide expansion of CDMA further demonstrates a growing confidence on the part of operators that data services represent a significant opportunity to increase average revenue per subscriber. The increasing capabilities offered by our segmented chipset roadmap are driving more features into wireless handsets such as higher megapixel cameras, multimedia and 3D gaming. At the same time, our integration strategy is enabling these features to be delivered by our chipset customers at a lower cost and faster time to market."
On November 3, 2004, on a GAAP basis we estimated total QUALCOMM revenues for the first fiscal quarter to increase year-over-year approximately 7 to 18 percent and total QUALCOMM diluted earnings per share of $0.23-$0.25, including an estimated $0.01 loss per share attributed to the QSI segment. Based on the current business outlook, we now expect total revenues to be approximately $1.4 billion, the high end of our prior guidance. We now expect total diluted earnings per share of approximately $0.26-$0.27, including the QSI segment, which is estimated to be approximately breakeven.
Due to their nature, certain income and expense items such as realized gains and losses, gains or losses on derivatives and asset impairments cannot be accurately forecast. Accordingly, the Company excludes such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.
QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. Headquartered in San Diego, California, QUALCOMM is included in the S&P 500 Index and is a 2003 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Note Regarding Use of Non-GAAP Financial Measures
The Company presents financial information excluding the QUALCOMM Strategic Initiatives (QSI) segment to facilitate evaluation by management, investors and analysts of its ongoing core operating businesses, including QUALCOMM CDMA Technologies (QCT), QUALCOMM Technology Licensing (QTL) and QUALCOMM Wireless & Internet (QWI). QSI results relate to strategic investments for which the Company has exit strategies of varying durations. Management believes that the information excluding QSI presents a more representative measure of the operating and liquidity performance of the Company because it excludes the effect of fluctuations in the value of investments that are unrelated to the Company's operational performance. The financial information excluding QSI should be considered in addition, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Reconciliations between total QUALCOMM results and results excluding QSI are presented on the Company's web site at http://www.qualcomm.com.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks associated with: the rate of development, deployment and commercial acceptance of CDMA based networks and CDMA based technology, including CDMA2000 1X, 1xEV- DO and WCDMA, both domestically and internationally; our dependence on major customers and licensees; fluctuations in the demand for CDMA based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; our dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; developments in current and future litigation, as well as the other risks detailed from time-to-time in the Company's SEC reports.
QUALCOMM is a registered trademark and MSM is a trademark of QUALCOMM Incorporated. All other trademarks are the property of their respective owners.
(1) The New Method of estimating royalties is based solely on reports received from licensees. The adoption of the New Method was announced by the Company in advance of the announcement of results for the fourth quarter and fiscal 2004 year ended September 26, 2004. Results under this method are presented herein to assist investors with evaluating financial performance on a comparable basis. Refer to the schedule included at the end of this release which reconciles results of the first and fourth quarters of fiscal 2004 as if the New Method of estimating royalties was in effect for the entire 2004 fiscal year, to results reported in accordance with GAAP.
For further information please contact: Bill Davidson, Investor Relations, +1-858-658-4813, ir@qualcomm.com, or Emily Gin, Corporate Public Relations, +1-858-651-4084, publicrelations@qualcomm.com, both of QUALCOMM Incorporated.
QUALCOMM Incorporated
A Comparison of the "Prior Method" of Estimating Royalties and the
"New Method" of Estimating Royalties
($ in millions)
Q104 Q404
Prior Method of Estimating Royalties
Estimate of estimated licensees for
prior period $151 $253
Royalties reported by estimated
licensees for prior period 208 255
Prior period variance included in
reporting period 57 2
Other royalties reported in
reporting period 45 99
Estimate for estimated licensees for
current period 205 --
Total QTL royalty revenues from
external licensees 307 101
Intercompany revenue 32 36
License revenue 15 14
Total QTL revenue using prior method $353
Total QTL revenue including
prospective change to new method in
Q4 '04 $151
New Method of Estimating Royalties
Total royalties reported by external
licensees (a) $253 $354
Intercompany revenue 32 36
License revenue 15 14
Total QTL Revenue using new method $300 $404
Difference between the estimation
methods $54 $(253)
Total QCOM revenues as reported
under GAAP $1,207 $1,118
Less: Difference between the
estimation methods 54 (253)
Total QCOM revenues using new method 1,153 1,371
Total QCOM revenues, and QCOM
revenues excluding QSI using new
method $1,153 $1,371
TOTAL QCOM net income as reported
under GAAP $352 $393
Less: Net income attributed to
difference between the estimation
methods (b) 33 (154)
Total QCOM net income using new
method 319 547
Less: QSI net income (loss) (66) 57
QCOM net income excluding QSI using
new method $386 $490
QCOM diluted EPS as reported under
GAAP $0.21 $0.23
EPS attributed to difference between
the methods $0.02 $(0.09)
Total QCOM diluted EPS using new
method $0.19 $0.32
EPS attributed to QSI $(0.04) $0.03
QCOM diluted EPS excluding QSI using
new method $0.23 $0.29
Shares previously used for diluted
EPS 827 n/a
Adjusted for stock split 1,654 1,692
All EPS amounts have been adjusted to reflect the 2:1 stock split that
was effected during the fourth quarter of fiscal 2004.
QTL revenues as reported under GAAP and using the new method are
presented to illustrate the difference between the prior method
used for royalties prior to the fourth quarter of fiscal 2004 and the new
method implemented starting in the fourth quarter of fiscal 2004.
(a) Represents royalty revenue that would have been reported during the
period if the "new method" had been adopted retroactively.
Does not represent royalty revenue that will be recognized under GAAP
due to the effect of the accounting change on these periods.
(b) QTL's rounded effective tax rate is 39% in fiscal 2004.
Sums may not equal totals due to rounding.
Revenues and earnings excluding the QSI segment, including forward
looking periods, are calculated as total QUALCOMM revenues and
earnings less revenues and earnings attributed to the QSI segment. No
other adjustments are made.
--------------------------------------------------------------------------------
Source: QUALCOMM Incorporated
I am wandering: will NOKIA use QCOM's EV-DO Chipset indirectly by the intermediary of a Korean Supplyer?
--------------------------------------------------------
Curitel wins $1.6 bn US mobile deal
Reuters
Seoul, December 20
http://www.hindustantimes.com/news/181_1161199,0003.htm
Curitel Communications Inc of South Korea said on Monday it had won a $1.6 billion deal to supply mobile phones to the wireless unit of US consumer electronics maker Audiovox Corp.
News of the deal, which exceeds Curitel's total 2003 revenue of $1.3 billion, sent the phone handset maker's shares up more than seven per cent, although some analysts said the deal might get scaled back.
"It's definitely a great boon to Curitel because typically profit margins from exports to the US market are much higher than domestic margins," said Greg Roh, an analyst at Dongwon Securities Co.
"However, there is a risk of scaling down the size of the supply later, if US demand is not as strong as expected."
Separately, Curitel confirmed a report that Nokia, the world's top mobile phone maker, had contacted it concerning the possible supply of advanced CDMA-based EV-DO handsets.
EV-DO is a high-speed data transfer service that supports Internet access speeds of about 300,000 bits a second -- about six times as fast as dial-up links in most homes.
CDMA, or code division multiple access, is a mobile phone technology widely used in the United States, Japan, South Korea and China.
"But there have been no follow-up negotiations," Koh Eun-sil, a Curitel spokeswoman, said by telephone.
Internet news provider edaily reported Curitel and SK Teletech Co, a unit of SK Telecom Co, were considering requests from Nokia to export mobile phones. Officials at SK Teletech said they could not confirm the report.
South Korean telecoms firms have been looking to offshore markets to offset sluggish growth in the saturated domestic mobile phone market. Three-quarters of the country's 48 million population already have at least one mobile phone.
Curitel would provide 10 million mobile phone units to Audiovox Communications Corp. for one year starting on December 20, 2004, the company said in a public notice to the Korea Stock Exchange.
"It is a significant deal that will grab the attention of U.S. consumers because it is the first time Curitel has exported mobile phones carrying its own brand name in the United States," said Koh.
Audiovox would sell mostly premium Curitel models that have digital cameras and other high-tech features, she said. Audiovox was acquired by telecom equipment gear maker UTStarcom Inc earlier this year. Curitel had signed a letter of intent to buy a controlling stake in Audiovox, but a final deal never materialised.
Assuming all the phones were sold, Curitel's handsets would account for about 15 per cent of the US CDMA-based mobile phone market in 2005, Koh said.
Nokia answers the call for fresh leadership: Mobile life of a telephone boss
By Nicholas George
Published: December 20 2004 02:00 / Last updated: December 20 2004 02:00
http://news.ft.com/cms/s/aad4bf94-522c-11d9-961a-00000e2511c8.html
Abig red plastic crate sits in the middle of the floor of Matti Alahuhta's office waiting to be filled with papers and mementos from the chief strategy officer's 26 years with the world's largest mobile phone maker.
Mr Alahuhta, 52, is not the only senior figure clearing their shelves at the Finnish group. Over the coming weeks the red crates will be appearing in the offices of Sari Baldauf, the 49-year-old head of the network division, and Jukka Bergqvist, a 47-year-old general manager in the same unit.
After more than a decade of extraordinary continuity, the tight-knit team that has helped transform Nokia from a sprawling industrial conglomerate into one of the world's leading technology groups is breaking up.
All three are on the executive management board. Mr Alahuhta and Ms Baldauf are part of the "gang of four" who have, since 1992, surrounded Jorma Ollila, the chief executive.
The three departures, announced within the space of two weeks during the past month, were always going to cause a stir, but the timing added drama.
Nokia has had a tough year. It failed to spot some trends in mobile phone design - for instance, the appeal of foldable "clam-shell" phones and the market for mid-priced colour screens. This and other factors led to a profits warning and a sharp drop in market share. Nokia has therefore spent most of the year playing catch-up.
For Mr Ollila, the departures and the company's difficult year are not directly connected. Sitting in Nokia's steel and glass headquarters in Helsinki, he insists that the departures - though for different reasons - were the result of an 18-month strategic planning process.
He says that, in a period of change for the industry, Nokia must adapt its structure and management team.
"From our point of view, it began in spring or summer 2003 when we in the management team started discussing the need to look at our organisation afresh," he says.
This resulted in the reorganisation of the company, as Mr Ollila added two new business units: a multimedia unit, concentrating on more advanced handsets with imaging or music capacity, and an "enterprise solutions" unit.
The thinking behind the realignment was straightforward. "The aim has been to get scale advantage in the handset business at the same time as being better focused on the new niches of the market-place - to capture the value added through multimedia and enterprise solutions," Mr Ollila says.
As Nokia reorganised, it began to rethink its management. "There was a discussion on how we would effect the generational change that . . .has taken shape one year after the organisational change. It is all one and the same transformation."
Mr Ollila admits that the management changes do raise serious questions, especially in a company that has traditionally valued long service and loyalty.
"You don't make generational changes easily. Just look at companies, organisa tions, families, any kind of communities where generation change happens - it's a big change. But change allows you to reposition, to rethink."
But is it Mr Ollila's task to oversee this generational shift? After all, his contract only runs until 2006. As one senior executive at a rival puts it: "Normally you would expect the new chief executive to form the new management team. But Mr Ollila is forming it already."
Mr Ollila says his critics misunderstand the way Nokia works.
"When we hire people in this company, we have five or six of their colleagues interview him or her," he explains. "This is not a top-down event." He scoffs at press suggestions that the new executives are his confidants. "That's not how it works."
But why change a structure and management team that has served the company so well? Mr Ollila answers simply: events in the market-place.
First, the number of new handsets has risen to between 630m and 650m this year, boosted by, among other things, a growth in emerging markets such as China and India where mobile phones are being used in the traditional way. Second, the arrival of 3G technologies in developed countries, allowing the development of non-voice services such as videoing, is expected to transform the business.
Third, telecoms operators, who buy 65-70 per cent of Nokia's phones, have become increasingly demanding. No longer ready to settle for standardised products, they are looking for innovations that help them differentiate their services from rivals.
"It's a very different era in terms of management requirements: in terms of skills, know-how, how you build your customer relationship," he says.
For Nokia, the idea of developing customised products has not been an easy one to entertain. Keen to protect its brand and capture the economies of scale that bulk manufacturing can bring, it has had to suffer criticism for its reluctance to change its phones to meet the desires of its biggest customers: the telecom operators.
Mr Ollila does not think this is fair criticism: "What we have stressed is this: we think fragmentation is not going to be positive to the development of this industry."
He says that standardisation, allowing manufacturers to create a cheap mass product, triggered the breakthrough of mobile telephony in the 1990s. But he accepts that the policy "might have been interpreted [as implying] that we were not always the first one to suggest how to do things in an operator-specific way".
Customisation is often looked at "simplistically, as a hardware game", he says. In the future, however, he thinks that, in order to meet operators' requirements, Nokia and its rivals will have to focus on software that allows them to provide services.
Nokia has invested heavily in software development, both directly and through its stake in Symbian, a UK-based software developer jointly owned by Nokia and other mobile phone producers. Partly, this has been a way of defending its market position against Microsoft which, five years ago, was seen as a big threat. Microsoft has remained a marginal player in the mobile phone industry, and some Nokia executives privately say that they think the company probably expended too much effort fending off the US giant.
While Nokia may have changed structure and personnel and even bowed a little to the demands of the operators, much of the group's business model remains fundamentally the same.
It continues to manufacture between 70 and 80 per cent of its handsets rather than outsourcing this to lower-cost producers. Also, it continues to aspire to market domination. Mr Ollila is convinced, as he always has been, that Nokia must retain a dominating share of the market. He thinks it is Nokia's broad appeal - covering all regions and segments - that lets it call the shots on price. As a result, it continues to extract the best profit margins in the business.
His market share target is 40 per cent, something many analysts regard as unrealistic, not least because of the advent of new technologies and strong competitors.
But Mr Ollila is not fazed. "Watch this space," he says, as he prepares to govern the company without his original lieutenants.
At a company he describes as "emotional", there appear to be no hard feelings about the changes. Last week, when Nokia's management team assembled at Mr Ollila's home for their Christmas party, he says it was only natural that Mr Alahuhta, Ms Baldauf and Mr Bergqvist be there.
"I think," he says, recalling the event, "we sang Christmas carols more in tune that ever before."
HOW TO MAKE A GENERATIONAL SHIFT
* Rationale: Nokia wanted to change its top staff. This was less about age and more about the length of time individuals had served at the company. Despite spending more than a decade at the top of Nokia, many executives are only in their late 40s or early 50s.
* Challenge: like other Finnish companies, Nokia has promoted long service and loyalty as a key part of its corporate culture - its top management team has been together for more than a decade. Implementing change does not suit everyone: new appointments may force others to reconsider their prospects in the company, having a damaging knock-on effect on performance.
* Method: Nokia's management team discussed the importance of generational change, as part of a broader plan to reorganise the company in the face of changes in the market.
* Outcome: three high-profile departures have been announced at the company in the past month.
* Next step: Nokia is a global company and it wants this to be reflected, over time, on the executive board. Only four out of the 12 members of the new board are non-Finns.
"You are paranoid. CEOs are paid to be paranoid - that is why they are there," Jorma Ollila explains. "They are there to raise the flags, to raise the questions."
It is his 13th year in charge of Nokia and the 54-year-old Finn, who has three grown-up children, insists his contract runs to autumn 2006. After that, who knows? Certainly there is little sign he wants to slow down. "I am enjoying it all. I have more energy than ever," he says.
Exact and sometimes prickly, Mr Ollila's intensity is broken by his infectious laugh. He is not a man easily interrupted.
On the morning of his interview he was playing tennis at 7am before addressing a group of 500 suppliers to Nokia's infrastructure business. After the interview, it is lunch in the canteen - "we don't have an executive dining room" - and then there are four or five more events before dinner with a customer.
In fact, the last year has seen Mr Ollila stepping up his direct involvement in the company - a result of the reorganisation. "I need to be more hands-on, even more so than I have traditionally been.
"Obviously some of the customer transactions and market shifts mean we all need to be more hands-on in top management.
"I think I have put in more travelling and more meetings with customers than I typically have in any year. I have been twice in India, three times in China and one other time in Asia, 12 times in the US and so on."
Despite the increased travelling, Mr Ollila has also found time to take on a new role in Finnish society. Earlier this month he accepted the chairmanship of two influential think tanks - ETLA, the Research Institute of the Finnish Economy, and the Finnish Business and Policy Forum.
"It's doing your duty for the community. I don't see it as any more dramatic than that. A small country like this is a special community, and I take a certain responsibility to give a little bit of a contribution to making sure this country does the right things in these times of turbulence."
Certainly the head of Nokia cannot be ignored, with the company expected to account for about 3.5 per cent of Finland's GDP this year. No other country in the OECD is so dependent on one company. Nor has Mr Ollila been shy of contributing to public debate, complaining that the country's high taxes make it hard for the company to recruit executives from abroad.
Mr Ollila's appointment as chair of the think tanks sparked rumours that he would consider running for president. He has political experience, once heading the Finnish Students' Association as a representative of the non-socialist Centre Party, who lead the country's coalition government. But Mr Ollila is quick to crush speculation. "Definitely no," he insists, "politics no."
Nokia confident of 3G growth
By Nicholas George in Stockholm
Published: December 20 2004 02:00 / Last updated: December 20 2004 02:00
http://news.ft.com/cms/s/4ad64784-522c-11d9-961a-00000e2511c8.html
Nokia has defended its forecast that the mobile phone market will grow by 10 per cent in 2005 and said growth could be stronger if sales of 3G handsets take off later in the year.
The Finnish group's forecast of a 10 per cent volume growth rate has been questioned by several analysts who believe the influx of new subscribers in emerging markets will slow in 2005.
But Jorma Ollila, chief executive of Nokia, said he was "confident" the figure would be reached, adding that it could be higher.
His comments come amid some significant departures from the Nokia hierarchy, including that of Matti Alahuhta, chief strategy officer, and Sari Baldauf, head of the network division.
In 2004 the handset market is estimated to have increased by more than 20 per cent to 630m-650m units. Nokia, the world's leading producer, is expected to have a global market share of more than 30 per cent.
In an interview with the Financial Times, Mr Ollila said he did not see Nokia's forecast for 2005 as aggressive. The growth would come through "a combination of emerging markets and a good and healthy replacement market".
He said: "Towards the year-end you could even see the 3G forecast as cautious, there is even some upside on 3G." In value terms growth would be "somewhat lower" but Nokia would be helped because of large numbers of new products.
In contrast, analysts at Nomura, the investment bank, are predicting handset sales growth of just 2-3 per cent and Morgan Stanley is forecasting 4 per cent.
Richard Windsor at Nomura said his forecast was due to lower levels of subscriber net additions in emerging markets such as Russia and Latin America.
"I am not convinced that you can add new subscribers as quickly as you have done this year. The only thing that could prove us wrong would be increased operator subsidies on handsets or deeper price cutting by handset producers," he said.
Mr Ollila also rebutted suggestions Nokia had been slow to get 3G handsets to the market. Vodafone, for example, features only one Nokia handset in the 10 it is using to launch its 3G services.
"We can't afford to be very late but being the first is not the issue for us," he said.
While other manufacturers might need to move early to establish credibility in the technology, Mr Ollila said that this was not an issue for Nokia. "We need to have a product that works. We need to be a credible volume player," he said.
Nokia was hit earlier this year by gaps in its product range and saw its market share fall. Since then it has clawed back market share by cutting prices and launching new phones. Nokia shares have fallen 15.8 per cent this year, underperforming its main rivals and global stock markets.
Qualcomm reaffirms support to 3G techs
By Chen Zhiming (China Daily)
Updated: 2004-12-20 08:42
http://www.chinadaily.com.cn/english/doc/2004-12/20/content_401601.htm
Qualcomm Inc, the world leader in code division multiple access (CDMA) digital wireless technology, reaffirmed it will support all three third generation (3G) mobile telecommunications standards to tap potential market demand in China.
"It is an inadequate question of whether 3G technologies have matured or not. Instead, it is a question of what is the development trend for 3G and what is the right model for 3G development in China," said Wang Jing, senior vice-president and chairman of Qualcomm Greater China.
Qualcomm dominates CDMA 2000, one of the three world recognized 3G standards. The other two include the European-based WCDMA (Wideband CDMA) and Chinese TD-SCDMA (Time Division Synchronous CDMA).
"Starting next year, 3G will see explosive development worldwide rather than being confined to certain regions," he said.
Currently, CDMA 2000 and WCDMA are well established and growing, registering a total of more than 140 million subscribers so far and are operated by 113 operators in 50 countries and regions worldwide.
He said he believes WCDMA, for example, is likely to sign up around 50 million new subscribers next year.
"As for TD-SCDMA, we support the standard and are keeping a close eye on the development of the technology," Wang said.
Besides the migration from voice to data, 3G will be characterized by enhanced application of value-added telecoms services next year, he said.
Nowadays, the content and service markets are mainly dominated by ringback tones, and colourful handset desktops.
In the near future, content will likely be focused more on video, music and games.
According to Yankee Group, the combination of location and mobility with audio, camera, video and gaming abilities, as a result of converging multimedia and mobility, will accrue about 600 million multi-media users in 2006.
The deployment of 3G networks around the world, leading to the migration from voice to data, will drive up data users to reach more than 1 billion in 2007.
Figures from Strategy Analytics said by 2009, wireless users worldwide will spend more than US$90 billion on data content.
A data-centric system drives broad market demand and increases sales for telecoms operators.
3G will enhance the ARPU (average revenue per user) for telecoms operators, he said.
"It has become vital for telecoms operators to become internationalized while embracing 3G," he said.
He said he believes though uncertainty is one of the distinguished characteristics in the Chinese market at the moment as there is no clear timetable from the Chinese Government to roll out its 3G strategies, the market potential in China is overwhelming.
"We choose to work closely with our partners in the Chinese market, including telecoms operators and equipment providers to speed up 3G development in China," he said.
Qualcomm so far has signed partnerships with many domestic telecoms equipment makers such as Huawei Technologies, ZTE, Lenovo, Bird and TCL.
Early this month, Huawei Technologies, China's largest telecoms equipment vendor, made the first North American launch of its CDMA2000 1X wireless network.
"Huawei's entry into the US market demonstrates the expanding capabilities of the Chinese telecoms equipment industry and the vitality of CDMA2000 1X technology around the globe," Wang said.
Huawei Technologies also clinched its first European contract for a 3G mobile network for Dutch carrier Telfort.
Huawei has contracts for networks based on the WCDMA standard in the Middle East, Hong Kong, Mauritius and Malaysia.
"It is appropriate for Chinese telecoms equipment providers to roll out development in overseas markets as there is still no clear scenario when the Chinese Government will kick off its 3G licence," Wang said.
He said 3G should actually provide a very good chance for domestic telecoms equipment providers to catch up with world renowned counterparts.
Celebrex a reminder that drug stocks can risk your financial health
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4686818&tid=qcom&sid=468...
Interesting Posts from the YAHOO QCOM Board:
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4686818&tid=qcom&sid=468...
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4686818&tid=qcom&sid=468...
Verizon Wireless has finally added the UTSarcom XV6600 (formerly Audiovox) Windows Mobile Pocket PC to their EVDO 3G network offerings. The XV6600 is based on the Intel XScale processor and comes packed with 64MB ROM, 128MB RAM and an SDIO expansion slot for extra memory and peripherals.
See press release below.
http://www.mobilemag.com/content/100/333/C3507/
Friday December 17, 2004 5:09 PM EST
Verizon Wireless Is Taking Business Communication to a Whole New Level With The XV6600
With BroadbandAccess and a Slide Out QWERTY Keyboard, the XV6600 is Now Available Through Verizon Wireless National Account Channels
Verizon Wireless, the nation’s leading wireless provider and the leader in next-generation technology deployment, announced today the availability of the XV6600 handset through the Verizon Wireless National Account sales team.
With Wireless Sync and Windows Mobile software, Verizon Wireless’ newest all-in-one phone/PDA from UTStarcom Personal Communications (formerly Audiovox Communications Corp.), keeps business professionals connected while they’re on-the-go and out of the office. The XV6600 is supported by BroadbandAccess, the nation’s fastest wide-area high-speed data network, so customers can receive and view large email attachments right from the handset. With the XV6600 and BroadbandAccess service that offers typical download speeds of 300-500 Kbps, businesses can increase employee productivity and speed up response time to customers, colleagues and business partners.
The Pocket PC-enabled XV6600 is based on Intel XScale® technology and offers customers the latest in Microsoft Pocket PC features with the Microsoft Pocket PC 2003 Phone Edition. The XV6600 is equipped with 64MB ROM / 128MB RAM and supports .wav, .mp3 .bmp, .jpeg, .gif files. The XV6600 also comes with the following features:
Digital Only: 800MHz/1900MHz
NationalAccess/BroadbandAccess Capable
VZEmail with Wireless Sync-MSM5500 Chipset
3.5”QVGA 65K Color Transflective LCD
Bluetooth Capable
Integrated QWERTY Keyboard
SDIO Expansion Slot for additional memory and peripheral devices
Customers looking for the latest in technology will appreciate the XV6600’s Bluetooth capabilities that allow customers to: exchange information, such as files, calendar items, tasks, contacts and business cards; synchronize with a PC via ActiveSync connection. Where available, the XV6600 runs on BroadbandAccess from Verizon Wireless.
Powered by an Evolution-Data Optimized (EV-DO) third generation (3G) wide-area network, BroadbandAccess offers the fastest commercially available wide-area, fully mobile wireless data experience in the nation today. BroadbandAccess is currently available in 20 major metropolitan areas and 24 airports from coast to coast and the company plans to continue to phase in BroadbandAccess to additional markets throughout 2005.
BroadbandAccess is based on CDMA technology, a digital wireless technology commercially developed by QUALCOMM. Because it is backward compatible, customers who travel outside a BroadbandAccess area with the XV6600 will seamlessly switch to Verizon Wireless’ existing NationalAccess network, based on 1xRTT technology.
The XV6600 is $549.99 with a 2-year customer agreement. Business customers may contact a Verizon Wireless Business Sales Representative directly at 1-800-VZW-4-BIZ. The XV6600 will be available through Verizon Wireless Communications Stores in January 2005.
Don't Underestimate Sprint Nextel's Challenges
http://www.varbusiness.com/components/weblogs/article.jhtml?articleId=55800954
By Dave Molta , EE Times
Fri. Dec. 17, 2004
When word first leaked last week that Sprint and Nextel would soon close a merger deal valued at over $35 billion, it kicked off a firestorm of media and analyst speculation. What effect would such a merger have on the competitive landscape for U.S. cellular services? How would the two companies integrate incompatible network infrastructures? Would the unique capabilities offered by Nextel, including a robust push-to-talk offering and location services, be orphaned in the interest of corporate efficiency? And my personal curiosity made me contemplate the following question: Would they have the guts to call the new company "Sprixtel"?
The answer to the latter question, not surprisingly, is "no." The new company, which represents a "merger of equals," will be called Sprint Nextel. Undoubtedly, there will be winners and losers among those people currently employed by the two companies, and many lost jobs, but those involved in the merger planning have made significant efforts to accommodate both sides. The company's new president and CEO, Gary Forsee, comes from Sprint; the chairman, Timothy Donahue, from Nextel. The COO, Len Lauer, comes from Sprint; the CFO, Paul Saleh, from Nextel. Executive headquarters will be located in Reston, Va., Nextel's home base; operational headquarters will be located in Overland Park, Kan., Sprint's turf.
Clearly, there are a number of potential benefits to the two companies and their stockholders, and possibly to their customers as well. Nextel and Sprint already lead the industry in average monthly revenue per user (ARPU) at $70 and $62, respectively (2Q 2004). Significant operational efficiencies will be achieved through the merger in infrastructure, marketing, sales, support and general administrative costs. The new company's overall spectrum position is greatly enhanced, and it will be the only cellular company to have significant spectrum assets in both the 1.9- and 2.5-GHz bands--prime real estate in this business. And potential market and service synergies exist as well. Nextel has strengths in the small and midsize business markets; Sprint has more strength in consumer markets. Nextel brings significant business mobile applications expertise to the table, and Sprint has one of the largest IP networks in the world.
But don't underestimate the challenges. Unlike AT&T Wireless and Cingular, which both used identical technologies, Sprint and Nextel provide services on fundamentally incompatible network infrastructure.Not surprisingly, the new company will jettison Nextel's Motorola-based iDen network technology in favor of Qualcomm's CDMA, the technology used by both Sprint and Verizon Wireless. Interestingly, both the Chief Strategy Officer, Tom Kelly, and the Chief Technology Officer, Barry West, come from Nextel. That's some pretty interesting corporate political maneuvering.
The merger is expected to close in the second half of 2005. It's too early to figure out the technology migration plan for existing Nextel customers, but it's unlikely to be a smooth one. Recognizing one of the unique Nextel assets, the companies promise to migrate push-to-talk to the new CDMA network, though it should be noted that Verizon hasn't had an easy time introducing such a service on its network.It was particularly interesting that the merger announcement stated that push-to-talk would be migrated to Sprint's EV-DO network. First, Sprint doesn't currently offer EV-DO service, and second, EV-DO is fundamentally a data-only service. Does this imply that customers will need to wait for the arrival of EV-DO-capable handsets, which currently don't exist, to get the new service? Yes, this will be interesting.
From a broader perspective, this merger is good news for the overall U.S. cellular market. After AT&T and Cingular tied the knot, creating a company with about 47 million subscribers, it was inevitable that smaller players like Sprint and Nextel would need to make some moves. Combined, Sprint Nextel will have about 36 million customers, assuming the company can hold onto them--not an easy thing in an era of number portability. Verizon, the second largest U.S. carrier, has about 41 million customers. Between the three, there will likely be significant competition in the U.S. market as well as robust nationwide coverage and operational efficiencies. While some might argue that more companies would provide a better competitive landscape, the scenario that unfolded this week seems better for competition than a Verizon acquisition of Sprint, which was also a hot topic of recent rumors. The odd-company-out is T-Mobile, with about 16 million subscribers in the United States.
QCOM's trading volumn increase may probably be due to some fund managers moved their holding from PFE to QCOM?
Rosy future for Sprint-Nextel marriage
By Wireless Watch
Published Friday 17th December 2004 14:43 GMT
http://www.theregister.co.uk/2004/12/17/sprint_nextel_merger_more_creative_mobile_future/
Verizon backs off bid
T-Mobile
The strengths of Nextel and Sprint
For Detail please click on above link.
Qualcomm to Ring Up More Technology Royalties
http://www.rednova.com/news/display/?id=111699
Dec. 16--The merger between Sprint and Nextel is not only a boon for the two cell phone companies but also for San Diego wireless giant Qualcomm. That's because the deal will broaden Qualcomm's already formidable base of U.S. cellular phone customers.
Sprint has long used Qualcomm's patented technology, while Nextel has used its own proprietary wireless technology. The merger of the country's third- and fifth-largest wireless companies means that the combined entity eventually will migrate all users to Qualcomm's technology, especially for next-generation wireless services such as high-speed data.
Analysts said that is undeniably good news for Qualcomm, which had been shut out of offering its code division multiple access, or CDMA, technology to Nextel's 15.3 million customers. Sprint has about 20 million wireless customers.
"It (Nextel) was the one major carrier that no one knew how they could migrate to CDMA," said Albert Lin, an analyst who covers the wireless industry for American Technology Research. "There was definitely that mystery of what Nextel could do if they had to go it alone."
Qualcomm said yesterday it was pleased by the merger, acknowledging that it will boost the reach of its CDMA technology. Qualcomm makes money selling CDMA chips and from royalties each time a CDMA chip is used in a cell phone. The more CDMA phones are sold, the greater Qualcomm's revenue. Verizon, the country's No. 2 wireless company, already uses Qualcomm's technology, while Cingular Wireless, which recently merged with AT&T Wireless, uses a competing technology.
"We think this is a positive development," Emily Gin, a Qualcomm spokeswoman, said about the merger.
Nextel and Sprint say they plan to complete their merger by the end of 2005 and begin to migrate customers to Sprint's next-generation CDMA network as soon as 2006. The companies said the migration will be gradual and that a phone that works with both companies' current technologies will be offered near the end of 2006.
While the merger is positive for Qualcomm, the wireless technology company will not see an immediate boost to its revenue, said Michael King, a wireless industry analyst for the Gartner Group. "The significant impact won't be felt until 2006," he said.
A research note from Piper Jaffray said Qualcomm shares should trade higher because the company is benefiting both from the Sprint-Nextel merger and from other cell phone companies' migration to next-generation wireless networks. Piper Jaffray, which rates Qualcomm an "outperform," gave a price target of $50 for the stock.
Shares in Qualcomm rose 30 cents yesterday to close at $44.34.
-----
To see more of The San Diego Union-Tribune, or to subscribe to the newspaper, go to http://www.uniontrib.com.
(c) 2004, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.
FON, NXTL, QCOM, VZ, PJC,
Source: The San Diego Union-Tribune
Moto Strikes Back
12.17.04
http://www.unstrung.com/document.asp?doc_id=64828
Motorola Inc. (NYSE: MOT - message board) has been quick to hit back at reports flagging it as a victim of this week’s $35 billion mega U.S. carrier merger, talking up a three-year network extension contract with Nextel Communications Inc. (Nasdaq: NXTL - message board) as proof of its future health.
Nextel currently runs a proprietary network technology developed by Motorola called iDEN. Analysts estimate the network generates approximately 20 percent of Motorola’s total infrastructure revenue and 17 percent of the company’s network profits (see Nextel & Moto WiDEN Ties).
The combined “Sprint-Nextel” business will, however, see Nextel eventually migrate its customer base to Sprint Wireless's (NYSE: PCS - message board) CDMA 1x EV-DO network. Earlier this week Sprint CEO Gary Foresee stated that the companies will “begin a transition of iDEN into EV-DO” in 2008 (see Deal Solves Nextel 3G Dilemma and Sprint Confirms EV-DO Network).
This move has led observers to cite Motorola as a clear loser in the deal, despite the vendor’s position as a shared supplier to Sprint’s EV-DO network (see Nextel-Sprint: Winners & Losers and Sprint Invests in EV-DO).
The strategically timed announcement from the vendor this week seems an attempt to allay such fears. Motorola has won a supply agreement at Nextel for iDEN infrastructure and handsets for a period of three years from January 1, 2005 through December 31, 2007.
“Based on current projections, Motorola expects the value of its infrastructure and subscriber shipments to Nextel to be comparable to the average levels we’ve seen over the past two years,” comments Adrian Nemcek, president of the vendor’s networks business, in a statement.
In February this year Nextel outlined its intention to increase capital expenditure to $2.2 billion in 2004 (see Nextel Boosts Moto). Specific financial details of this latest announcement have not been disclosed.
Analysts believe the deal is a boost for Motorola’s short-term prospects but remain cautious on its distant outlook.
“While longer-term we continue to believe a Sprint PCS/Nextel merger is likely to adversely impact Motorola, near-term, we view this announcement as positive,” reports a Lehman Brothers research note.
“In spite of the three-year contract, Motorola is naturally the big loser, as its exclusive relationship with Nextel in infrastructure and devices has vanished,” adds Bill Lesieur, director at Technology Business Research Inc. (TBR).
In a separate announcement, Motorola also unveiled its latest push-to-talk kit for Nextel. The new IP-based platform is intended to be interoperable with the future EV-DO network. Commercial deployment is forecast for the first half of 2006 (see Moto Touts PTT Upgrade).
— Justin Springham, Senior Editor, Europe, Unstrung
richbloem, Than you!
Why QCOM was down a lot today? was it down because of triple witching day tomorrow or pension expensing rules?
Symbol Time* Trade* Change* After Hrs Chg* Bid* Ask*
QCOM 3:08PM ET 43.34 -1.00 (2.26%) N/A 43.33 43.34
Sprint, Nextel herald 'future of communications'
New powerhouse will compete with Verizon and Cingular
By Paul Roberts, IDG News Service
December 15, 2004
http://www.infoworld.com/article/04/12/15/HNsprintnextel_1.html?source=rss&url=http://www.infowo....
Executives from Sprint and Nextel Communications took to a stage at the St. Regis Hotel in New York Wednesday to announce a definitive agreement to merge their two companies and create the third largest mobile phone company in the U.S.
Sprint (Profile, Products, Articles) Chief Executive Officer (CEO) Gary Forsee and Timothy Donahue, the CEO of Nextel, trumpeted the strength and promise of the new company, to be called Sprint Nextel. The merged company will have a combined equity value of approximately $70 billion, more than 35 million wireless subscribers and a network covering an area of almost 262 million people.
The merger will also result in the spinoff of Sprint's local phone business into a separate company.
Addressing an audience of investment industry insiders and media, Nextel's Donahue called the combined company the "future of communications," and said that joining his company to Sprint will create a new telecommunications powerhouse, with spectrum rights, product portfolios and distribution networks that will allow it to compete with companies such as Verizon Communications Inc. and Cingular Wireless (Profile, Products, Articles) LLC, which recently merged with AT&T Wireless Services Inc.
Forsee will take over as CEO of the combined company, with Donahue acting as executive chairman. Further underscoring the theme of a "merger of equals," the company will also maintain its operational headquarters in Overland Park, Kansas, current home to Nextel, and an executive headquarters in Sprint's home of Reston, Virginia, Donahue said.
With the staffs of the two companies observing the proceedings over a live Webcast, both executives paid homage to the hard work of employees of both companies. However, both Forsee and Donahue made it clear that staff reductions would be unavoidable as the companies combine their operations and networks following regulatory approval of the merger, which is expected in the first six months of 2005.
While he declined to discuss details of where cuts might come, Forsee said that the company will work to eliminate overlaps between the two organizations and that it wouldn't make sense to move "thousands of employees" between Kansas and Reston, or Reston and Kansas.
According to Forsee, 22,000 employees who work with Sprint's local phone business will leave the merged company to work for that newly created entity.
Sprint Nextel also expects to realize huge savings by consolidating information technology as well as sales, marketing and administrative organizations. It will also try to extract better deals from suppliers by leveraging the company's increased size, Forsee said.
Total savings to the company through those "synergies" could total $12 billion, the executives said.
Executives from both companies spoke enthusiastically about the opportunities created by combining the two companies, especially with Nextel's strength in innovative voice services, like the popular "push to talk" feature, and Sprint's strength in Internet and data services.
Following regulatory approval, the combined company will begin to merge the companies' networks, looking for collocation opportunities where they exist, and making sure that Nextel customers can receive service from Sprint's cell network, and vice versa, Forsee said.
A longer-term project will be migrating Nextel customers and the two-way radio "push to talk" feature from the company's network, which uses Motorola (Profile, Products, Articles) Inc.'s iDEN (Integrated Digital Enhanced Network), to Sprint's network, which uses CDMA (Code Division Multiple Access) technology, the executives said.
Sprint Nextel will continue to invest in and grow its iDEN network through 2007, and is looking at opportunities to market it to governments and public safety organizations, which make heavy use of the "push-to-talk" capability, Donahue said.
In the short term, the companies are working with Motorola to offer their customers a dual-mode phone that supports both iDEN push-to-talk and CDMA, Donahue said.
Sprint will work aggressively with federal and state regulators to win approval for the spinoff of its local telecom business and to make sure that the new company has the cash and capital resources to be successful, Forsee said.
The new company will be the largest local phone company in the country, with 7.7 million local access lines in 18 states, he said.
Sprint expects approval for local phone spinoff to take longer than approval for the merger, but hopes to win approval for the plan in nine months to one year, Forsee said.
Jeff Kagan, a telecom industry analyst said, "This is good news for the wireless industry."
"This creates three big wireless competitors carrying about 75 percent of the traffic, which is very helpful," Kagan said. "Three major carriers can help keep prices low for customers, expenses lower for the companies and innovation high. The wireless industry needed this wave of consolidation."
Like the merger of Cingular and AT&T Wireless, the joining of Sprint and Nextel is an example of the need for consolidation in the wireless industry, as companies try to resolve network bottlenecks and gear up to spend billions of dollars on network upgrades,such as Sprint's ongoing effort to upgrade its PCS wireless network with the high-capacity EV-DO technology, Kagan said.
"Since the mergers will happen before they spend the money, they will save significantly," he said. "In some cases they will have more capacity, and in other cases they will only have to spend once, not twice. It should help the merged company save quite a bit of money."
Sprint and Nextel announce merger
Telecoms.com News
15 December 2004
James Middleton, james.middleton@informa.com
http://www.telecoms.com/NASApp/cs/ContentServer?pagename=marlin/home&siteid=30000000461&mp_c....
Sprint and Nextel Communications today announced a definitive agreement to merge, creating the country's third largest wireless operator in a deal estimated to be worth US$35 billion. With around 35 million subscribers and 5 million additional subscribers through affiliates, the merged company, Sprint Nextel, will trail close behind Verizon Wireless with around 42 million customers and recently merged Cingular Wireless/AT&T Wireless with 47 million subscribers.
The new company, which will have a combined total equity value of approximately US$70 billion, will be owned 50/50 by Sprint and Nextel shareholders respectively. Existing Sprint shares will remain outstanding, while each Nextel share will be converted into new company shares plus a cash amount per share. The merger is expected to close in 2H05 and the company also intends to spin off Sprint's fixed-line business following the merger.
The new company will be headed up by Gary Forsee, currently chairman and CEO of Sprint, who will become president and CEO of Sprint Nextel, with Timothy Donahue, president and CEO of Nextel, becoming chairman of the new company.
The merged company is expected to deliver operating cost and capital investment synergies with an estimated net present value of more than US$12 billion through a reduction in the number of cell sites and switches, and an extension of Sprint's deployment of EV-DO to the combined customer base, including migration of Nextel's services to CDMA. The move answers questions raised earlier this week by confirming Nextel's abandonment of FLASH-OFDM trials.
Following the merger, the new company will benefit from Nextel's nationwide 800MHz/iDEN network and Sprint's national 1.9GHz/CDMA network, with Nextel services, including push to talk to be migrated to EV-DO, reportedly in 2006. Sprint Nextel will also have the capability to deploy services on the two companies' 2.5GHz combined spectrum holdings that together cover 85% of households in the top 100 markets.
Vodafone and Verizon deny Sprint speculation
By Paul Taylor and James Politi in New York and Lina Saigol in,London
Published: December 15 2004 02:00 / Last updated: December 15 2004 02:00
http://news.ft.com/cms/s/7566f148-4e3e-11d9-9351-00000e2511c8.html
Verizon and Vodafone both distanced themselves yesterday from speculation that they were preparing a bid for Sprint, the third-largest US mobile operator.
Sprint is expected to announce plans for a $35bn merger with Nextel, the fifth-largest US mobile carrier, as soon as today. The combined company would have almost 40m subscribers, behind Cingular, the market leader, and Verizon Wireless, a joint venture between Verizon and Vodafone.
News of the proposed Sprint-Nextel deal has sparked speculation that Verizon and Vodafone might enter the fray.
But Vodafone, whose share price in London dropped sharply following reports that had given Verizon the go-ahead for a bid, went out of its way yesterday to deny it was considering such a move. "There have not been any discussions, and we are not in discussions with Verizon about any offer for Sprint," it said.
Vodafone, which owns 45 per cent stake of Verizon Wireless and so would need to give its approval for any bid, indicated it remained committed to pursuing organic growth at Verizon Wireless. People close to Verizon signalled no immediate intention to launch a bid. Vodafone's denial of interest was to be taken seriously, they said.
Both Verizon and Vodafone would like to increase their stakes in Verizon Wireless, which lost its market-leading rank to Cingular in late October when Cingular completed its $41bn acquisition of AT&T Wireless.
Vodafone shareholders are known to be deeply sceptical about any further acquisitions following an abortive bid for AT&T Wireless.
Reflecting that, the shares were marked down by 3.5 per cent in early London trading but began to recover after Vodafone dismissed the latest speculation. Additional reporting by Maija Pesola and Robert Budden in London
Qualcomm Expects Brazil Wireless Market to Expand 25% in 2005
December 14, 2004 12:58 EST -- Qualcomm Inc., the world's second- largest maker of microchips that run mobile phones, expects Brazil's wireless market to expand at a slower pace in 2005, as the country gets closer to saturation, said Marco Aurelio Rodrigues, president of the company's Brazilian unit.
http://quote.bloomberg.com/apps/news?pid=conews&tkr=QCOM:US
Vodafone denies Sprint-Verizon talks
By Madeleine Acey, CBS.MarketWatch.com
Last Update: 12:33 PM ET Dec. 14, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7B2D321F15-3078-4F7F-8508-A6042BB8A76A%7D&siteid...
LONDON (CBS.MW) -- Vodafone Group on Tuesday denied a report that said the British-based mobile network giant was backing Verizon Communications in a possible bid to buy out Sprint Corp.
The news comes as Sprint (FON: news, chart, profile) reportedly is on the verge of agreeing to a $35 billion merger pact with Nextel Communications (NXTL: news, chart, profile). That dealt would be scuttled if Verizon (VZ: news, chart, profile), the largest U.S. telephone company, were to swoop in to acquire Sprint, the No. 3 carrier in the wireless telecom market. See related story.
A spokesman for British-based Vodafone (VOD: news, chart, profile) (UK:VOD: news, chart, profile) said the company is "not in discussions with Verizon" regarding a possible bid for Sprint. He cited past comments by Vodafone that it's not interested in gaining any more U.S. assets.
In midday trading on Wall Street, shares of Kansas-based Sprint climbed 48 cents to $24.92. Vodafone shares, which fell as much as 4 percent earlier in London trading, lost 57 cents to $27.10 on the New York Stock Exchange.
Shares of Verizon were down 77 cents, or 1.9 percent, at $40.51. Nextel fell 49 cents, or 1.3 percent, to $21.58.
RPT-UPDATE 2-Verizon unlikely to bid now for Sprint-sources
Tue Dec 14, 2004 01:29 PM ET
(Repeats with change to headline or text)
By Jessica Hall
PHILADELPHIA, Dec 14 (Reuters) - Verizon Communications Inc. (VZ.N: Quote, Profile, Research) has no imminent plans to bid for Sprint Corp. (FON.N: Quote, Profile, Research) , people familiar with the situation said on Tuesday, lifting a potential obstacle to Sprint's bid for Nextel Communications Inc. (NXTL.O: Quote, Profile, Research) .
Separately, Britain's Vodafone Group Plc (VOD.L: Quote, Profile, Research) denied it was in talks with Verizon, its wireless joint venture partner, about any offer for Sprint.
The two developments appeared to contradict a report earlier on Tuesday by the Wall Street Journal, which said Verizon had gained the backing of Vodafone to make a bid for Sprint in a move that could thwart Sprint's $35 billion bid for Nextel.
The deal between Sprint and Nextel is expected to be announced on Wednesday, sources familiar with that deal said.
Verizon has no plans to thwart that deal with a rival bid, people familiar with the matter said.
Verizon declined to comment. Sprint and Nextel could not immediately be reached for comment.
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=7092234
Sprint may OK Nextel deal today
Posted on Tue, Dec. 14, 2004
Signs indicate talks are in final stages
By SUZANNE KING and DAVID HAYES The Kansas City Star
http://www.ledger-enquirer.com/mld/ledgerenquirer/business/10410257.htm
Sprint Corp.'s board of directors, which on Monday gathered in Overland Park, could vote on a merger with Nextel Communications this morning.
If the board approves the deal during its regularly scheduled meeting, company officials are expected to announce the merger in New York on Wednesday.
Sprint's top two executives, chairman and chief executive Gary Forsee and president and chief operating officer Len Lauer, have reservations to stay at New York's St. Regis Hotel tonight.
Officials with both companies have declined to confirm that merger discussions are under way.
Speculation about the deal has been swirling for almost a week. Barring a last-minute hitch, all signs indicate that negotiations are in the final stages.
According to various reports, based on unnamed sources, Nextel stockholders would receive 1.3 shares of Sprint for each share of Nextel. A modest amount of cash would be included in the $35 billion deal. A new company, called Sprint-Nextel, would have executive headquarters in Reston, Va., with an operations headquarters in Overland Park.
Forsee reportedly would be chief executive of the merged company, while Timothy Donahue, Nextel's top executive, would become executive chairman.
The potential merger has been widely supported in the investment community, which sees the combination as a way for the third- and fifth-largest wireless carriers to compete with Cingular Wireless and Verizon Wireless, the two largest competitors in the market.
Consumer groups, meanwhile, have expressed concern about further consolidation in the wireless industry leading to reduced service and higher prices.
For Sprint, the merger would be aimed at ensuring its place in the tumultuous telecom industry. In recent years, Sprint has gone through a failed merger attempt with WorldCom Inc., now known as MCI; severe job cuts as it struggled to survive industry turmoil; and a difficult changeover in the executive suite.
The proposed merger also would be yet another change for Nextel, which is known as a “scrappy” company that has managed to make the most out of less-than-desirable circumstances.
Nextel was formed in 1987 by Morgan O'Brien, a former Federal Communications Commission lawyer. O'Brien believed that truckers, blue-collar workers in the field, cab companies and fleet operators would be more comfortable with SMR — Specialized Mobile Radio — than with cell phones. So he and a consortium bought up radio dispatch licenses across the U.S.
Their company, First Call, went public in 1992 and changed its name to Nextel in 1993.
The company was built by rolling up many operations, including odd bits and pieces of wireless spectrum.
“When they came to the market, they were really considered the poor stepchild,” said Michael Kleeman, a fellow in technology at the University of California in San Diego.
For a long time the company limped along, struggling for funding and grappling to come up with technology that would allow its network to compete in the fiercely competitive wireless space.
A project to convert Nextel from analog to digital nearly failed before wireless pioneer Craig McCaw invested $1.1 billion in the company beginning in 1995.
The cash infusion allowed Nextel to launch its walkie-talkie-like cell phone service — push-to-talk — across the country. That technology, built on Motorola's integrated digital enhanced network, proved to be Nextel's trump card.
The service appealed to small- and midsize companies with employees who worked in the field.
“They were always viewed as sort of the blue collar of the industry. My response has always been, ‘Yeah, and so is Wal-Mart,' ” said Joe Gensheimer, former general counsel for Sprint PCS. “They've really taken a lot of little operations and done a terrific job of turning their push-to-talk service into an incredible selling point.”
Since calls made using the walkie-talkie service stay on Nextel's network, the company avoids fees that companies have to pay when carrying regular cell phone calls.
Nextel also has built intense loyalty among its customers.
That's an indication of Nextel's strong marketing skills, said Richard Nespola, chief executive of the Management Network Group, an Overland Park telecommunications consulting firm.
Currently, the company is faced with another technological transition. To keep pace with consumers and companies that want Internet access on wireless phones, Nextel has been studying major technology upgrades for the past year.
The move also is necessary because Nextel's current service interferes with fire and police radio systems in many communities.
Earlier this year, Nextel asked for proposals to convert its network to one of two other technologies — Flarion or CDMA, the same technology used by Sprint.
With more than $9 billion in debt, Nextel faces almost doubling that figure in the next few years to upgrade its network and meet federal requirements.
In fact, the technological challenges Nextel is facing led one research firm to speculate that Sprint would be overpaying if it pays more than $30 a share.
Deutsche Bank analysts said Monday Nextel had “secured an exceptionally good deal” for shareholders by “playing Sprint's insecurity” about its size.
Investors apparently do not agree. Sprint shares closed Monday at $24.44, up 30 cents. Nextel also closed higher, up 23 cents, to $29.99.
To reach Suzanne King,
call (816) 234-4336 or send e-mail to sking@kcstar.com.
To reach David Hayes, call (816) 234-4904 or send e-mail to dhayes@kcstar.com.
Bell Canada Announces Roll Out of Canada's Fastest Wireless Network (EVDO Network)
Source: Bell - Posted 48 minutes ago
http://www.itpronto.com/content/104/359.html
Bell Canada today announced it plans to roll out the fastest and most advanced wireless data network in Canada. Bell's next generation EVDO (Evolution, Data Optimized) network will deliver wireless data services up to six times faster than the fastest wireless network available in Canada today, allowing customers to download data on their mobile devices at speeds close to those of their high-speed home connections. With speeds of up to 2.4 mbps, customers will be able to use data-rich content and run applications such as e-mail, video messaging, gaming, video conferencing, telematics and streaming entertainment. Technical trials of the Bell EVDO network have begun in the Greater Toronto Area (GTA) and the new network will roll out throughout 2005 and 2006 in major urban centres across Canada.
"Customers want a simple way to be connected, entertained and informed no matter where they are," said Michael Neuman, President of Bell Mobility and Bell Distribution Inc. "Bell's EVDO network will offer Canada's fastest wireless experience and deliver leading-edge innovation to the market. It will revolutionize the way Canadians use their mobile devices."
Wireless data is a rapidly increasing part of wireless growth and accounts for more than half of Bell's 2004 Wireless Average Revenue per User (ARPU) growth. EVDO provides the platform for the next major growth phase in wireless services, allowing for new consumer video, data-rich applications and enhanced enterprise productivity solutions. With extensive partnerships in place, Bell is uniquely positioned to build the EVDO network to support data applications as well as to develop content-rich services.
"Wireless data presents the same tremendous growth potential today that wireless voice did almost 20 years ago," continued Mr. Neuman. "EVDO puts CDMA ahead of other technologies in Canada. Its roll-out will mesh seamlessly onto our existing 1X network and will allow for a simple migration of our customers, ensuring Bell's continued success in the wireless market."
Bell's EVDO technology will be on display at BCE Inc.'s Business Review Conference for 2005 for financial analysts on Wednesday, December 15, 2004 at The Carlu, 444 Yonge Street, in Toronto. For more information on the conference, please visit www.bce.ca.
Verizon gets Vodafone OK for Sprint bid
Posted 12/14/2004 4:33 AM Updated 12/14/2004 8:19 AM
For detail, see link:
http://www.usatoday.com/money/industries/telecom/2004-12-14-verizon-sprint-nextel_x.htm