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South Korea solves license problem
South Korea solves license problem
Qualcomm says that it supports an understanding reached between the governments of the USA and South Korea over CDMA licensing. The South Korean government had planned to impose a generic wireless internet platform on all networks in the country, a move which could have blocked Qualcomm's BREW platform from being deployed. The USTR lodged trade issues on the Korean government’s actions saying that “The compulsory application of WIPI is a trade barrier against Qualcomm’s BREW.” Under the terms of the agreement, South Korean networks will still be required to support the local WIPI standard, but will also be allowed to support BREW as well.
"Qualcomm is very pleased that the United States and South Korean governments have reached this understanding. We believe freedom for each operator to select a preferred wireless Internet platform to meet its customers' needs will maintain a high-level of competition and creativity in the South Korean wireless market," said Dr. Irwin Mark Jacobs, chairman and CEO of Qualcomm. "Indeed, this is welcome news for all parties in the mobile applications marketplace. Subscribers of BREW-enabled services, for example, can continue to access and enjoy BREW-based applications. Korean developers can continue to benefit by delivering their locally developed BREW-based applications to the worldwide marketplace.
"I commend the U.S. and South Korean governments for their cooperative efforts to ensure that technical standards do not hamper the availability of new technologies and services. Special recognition is due to U.S. Trade Representative Robert Zoellick, his staff at USTR, and the Administration's interagency team for their leadership on this landmark understanding. We also appreciate Minister Chin Dae-je's expertise in the wireless sector and management of this issue."
http://www.cellular-news.com/story/11052.shtml
Sony Ericsson handset sales outperform LG Elec.
Sony Ericsson is looking to regain its seat in the elite group of the top five mobile phone makers, selling 8.8 million handsets during the first quarter, 50,000 more than its closest Korean rival, LG Electronics Inc.
LG Electronics, with 5.3 percent market share, replaced Sony Ericsson in the No. 5 slot, pushing it down to sixth place last year by a difference of just 0.1 percentage point, according to market research firm Strategy Analytics.
"The complete quarterly report on the handset market by Strategy Analytics will be available in May. With the competition so intense between the two for any small gain, the real situation can be a little different," said an LGE official.
LG Electronics aims to sell 40 million mobile phones this year, up 4 million units from its previous target set in February, to carve out a 7 percent market share by the end of the year. Its second-quarter target is 12 million.
Sony Ericsson, the Japanese-Swedish joint venture, expects its global handset sales to expand to 550 million units, against its previous forecast of 520 million.
(smkim@heraldm.com)
2004.04.26
http://www.koreaherald.co.kr/SITE/data/html_dir/2004/04/26/200404260007.asp
Qualcomm upgraded to "buy" - update
Friday, April 23, 2004 2:22:51 PM ET
Wedbush Morgan
NEW YORK, April 23 (New Ratings) — Analysts at Wedbush Morgan upgrade Qualcomm (QCOM.NAS) from “hold” to “buy,” while raising their estimates for the company. The 12-month target price is set to $83.
Shares of Qualcomm, a global CDMA (Code Division Multiple Access) technology wireless telecom solutions provider, are currently trading at $65.84.
According to Wedbush Morgan’s research note published yesterday, Qualcomm reported its 2Q FY04 results ahead of expectations. The analysts mention that the company’s earnings upside was primarily driven by its increased QTL (Qualcomm Technology Licensing) segment margins for the quarter. Qualcomm further strengthened its cash, cash equivalents and marketable securities position at the end of the March quarter this year, Wedbush Morgan says.
Qualcomm is well positioned to benefit from the robust CDMA handset demand trends in the near term, the analysts say. The company has raised its CDMA handset revenue guidance for 2004, Wedbush Morgan adds. According to the analysts, Qualcomm expects the average selling prices for its handsets to stabilize this year. Wedbush Morgan anticipates additional revenue growth opportunities ahead for the company through WCDMA (Wideband CDMA) deployments across its various end markets.
The EPS estimates for FY04 and FY05 have been raised from $1.85 to $2.03 and from $1.97 to $2.29, respectively.
Wedbush Morgan upgrades Qualcomm from “hold” to “buy.”
http://www.newratings.com/analyst_news/article_413321.html
S. Korea drops Sun-only software mandate
Last modified: April 23, 2004, 4:47 PM PDT
By Ben Charny
Staff Writer, CNET News.com
South Korea's telephone ministry has reversed its decision to force South Korean cell phone service providers to use only Sun Microsystems download software to sell ring tone, games or other downloadable software.
The United States would have sought redress in the World Trade Organization had South Korea's Ministry of Information and Communications not reversed its April 2003 mandate giving Sun exclusive presence in its Wireless Internet Platform for Interoperability cell phone standard, said a U.S. trade representative. Benefiting the most from the flip flop, announced Friday, is San Diego cell phone chip and software maker Qualcomm, whose BREW (Binary Runtime Environment for Wireless) download software is popular in South Korea and other Asian countries.
http://news.com.com/2110-1039_3-5198954.html?part=rss&tag=feed&subj=news
Qualcomm Newratings: 4/21 to 4/23/04
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http://www.newratings.com/analyst_news/search.asp?search=qcom
QUALCOMM Welcomes the Understanding Between United States and South Korea Regarding Wireless Internet Platform Parameters
Friday April 23, 9:35 am ET
SAN DIEGO, April 23 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM - News), pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology, today announced the Company's support for an understanding reached between the governments of the United States and South Korea to preserve choice in the Korean wireless Internet platform market. The decision will grant South Korean wireless application developers, device manufacturers and wireless operators continued flexibility in introducing various wireless Internet technologies for their service offerings and will help maintain South Korea's role as a worldwide leader in the wireless industry.
"QUALCOMM is very pleased that the United States and South Korean governments have reached this understanding. We believe freedom for each operator to select a preferred wireless Internet platform to meet its customers' needs will maintain a high-level of competition and creativity in the South Korean wireless market," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM. "Indeed, this is welcome news for all parties in the mobile applications marketplace. Subscribers of BREW-enabled services, for example, can continue to access and enjoy BREW-based applications. Korean developers can continue to benefit by delivering their locally developed BREW-based applications to the worldwide marketplace.
"I commend the U.S. and South Korean governments for their cooperative efforts to ensure that technical standards do not hamper the availability of new technologies and services. Special recognition is due to U.S. Trade Representative Robert Zoellick, his staff at USTR, and the Administration's interagency team for their leadership on this landmark understanding. We also appreciate Minister Chin Dae-je's expertise in the wireless sector and management of this issue."
QUALCOMM's BREW(TM) system provides products and services that connect the mobile marketplace value chain, which includes application developers, publishers, content providers, device manufacturers, operators and consumers. Publishers and developers worldwide are generating revenue from BREW-based applications and content, and 26 manufacturers have offered more than 135 BREW-enabled device models to consumers. BREW is successfully enabling the commercial wireless data services of many very successful operators, including Verizon Wireless, ALLTEL, Cellular One, MetroPCS, Midwest Wireless and U.S. Cellular in the United States, China Unicom, KDDI in Japan, KTF in South Korea, Hutch in Thailand, Telstra in Australia, VIVO in Brazil, BellSouth Chile, BellSouth Colombia, BellSouth Ecuador, BellSouth Guatemala, BellSouth Nicaragua, BellSouth Panama, BellSouth Peru, Telefonica Moviles in Peru, Movicom in Argentina, Telcel and Movilnet in Venezuela, Verizon Dominican Republic, Verizon Wireless Puerto Rico and Pelephone in Israel.
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, Calif., 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.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including the extent and speed to which the BREW solution is deployed and adopted, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 28, 2003, and most recent Form 10-Q.
QUALCOMM is a registered trademark of QUALCOMM Incorporated. BREW is a trademark of QUALCOMM Incorporated. All other trademarks are the property of their respective owners.
For further information, please contact Christine Trimble, Corporate Public Relations, +1-858-651-3628, publicrelations@qualcomm.com, or Michele Bakic, QUALCOMM Internet Services, +1-858-651-4017, mbakic@qualcomm.com, or Bill Davidson, Investor Relations, +1-858-658-4813, ir@qualcomm.com, all of QUALCOMM Incorporated.
--------------------------------------------------------------------------------
Source: QUALCOMM Incorporated
Inaudible Outlook Remarks From QUALCOMM's Second Quarter Fiscal 2004 Earnings Conference Call
SAN DIEGO, April 22 /PRNewswire/ -- QUALCOMM Incorporated(NASDAQ-NMS:QCOM) (Nasdaq: QCOM) hosted a conference call for its second quarter fiscal 2004 earnings on Wednesday, April 21, 2004. Due to technical difficulties, a portion of the remarks by Bill Keitel, QUALCOMM(NASDAQ-NMS:QCOM) EVP and chief financial officer, may have been inaudible. Specifically, when discussing the Company's financial outlook, the following statement may not have been clearly broadcast, "based on royalty reports from our licensees, worldwide CDMA handsets shipped in the December quarter were approximately 37 million units, well above our expectation at the outset of the quarter of 32 million units. We expect our licensees to report March shipments of approximately 37 million units."
A complete transcript of Mr. Keitel's remarks are posted at the following Web site http://www.qualcomm.com/IR/.
QUALCOMM Incorporated(NASDAQ-NMS:QCOM) (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, Calif., QUALCOMM(NASDAQ-NMS:QCOM) is included in the S&P 500 Index and is a 2003 FORTUNE 500(R) company traded on The Nasdaq Stock Market(NASDAQ-OTCBB:NDAQ) (R) under the ticker symbol QCOM. The statement above, with respect to expected shipments, is forward looking and is subject to risks as outlined in our quarterly and annual report documents filed with the Securities and Exchange Commission.
For further information please contact Bill Davidson, Vice President, Investor Relations of QUALCOMM Incorporated(NASDAQ-NMS:QCOM) , +1-858-658-4813, or fax, +1-858-651-9303, ir@qualcomm.com.
SOURCE QUALCOMM Incorporated(NASDAQ-NMS:QCOM)
-0- 04/22/2004 P
/CONTACT: Bill Davidson, Vice President, Investor Relations of QUALCOMM
Incorporated(NASDAQ-NMS:QCOM)
, +1-858-658-4813, or fax, +1-858-651-9303, ir@qualcomm.com/
/Web site: http://www.qualcomm.com /
/Web site: http://www.qualcomm.com/IR /
(QCOM)
CO: QUALCOMM Incorporated(NASDAQ-NMS:QCOM)
ST: California
IN: CPR TLS MLM ECP
SU: CCA MAV
MV
-- LATH143 --
3043 04/22/200418:00 EDThttp://www.prnewswire.com
http://www.nasdaq.com//asp/quotes_news.asp?logopath=http%3a%2f%2fcontent.nasdaq.com%2flogos%2fQCOM.G...
Global Growth of 3G CDMA Aids Qualcomm
23rd April , 2004
US : QUALCOMM Incorporated announced its second quarter fiscal 2004 results ended March 28, 2004. Revenues were $1.2 billion in the second quarter of fiscal 2004, up one percent sequentially and 20 percent year-over-year. The second quarter fiscal 2004 net income was $488 million and diluted earnings per share were $0.58, up 39 percent and 35 percent sequentially and 374 percent and 346 percent year-over-year, respectively.
The second quarter fiscal 2004 net income excluding the QSI segment was $442 million, up six percent sequentially and 41 percent year-over-year. The second quarter fiscal 2004 diluted earnings per share excluding the QSI segment were $0.53, up four percent sequentially and 39 percent year-over-year.
In this quarter we disposed of all remaining operations and assets related to the Vesper Operating Companies and TowerCo. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," their results of operations and cash flows are presented as discontinued operations within the QSI segment. Our statements of operations and cash flows for prior periods have been adjusted to reflect this.
"Our financial results reflect the strong acceptance and rapid global growth of 3G CDMA," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM. "Consumers and enterprises increasingly recognize the benefits of CDMA-based networks, with the number of subscribers now exceeding 200 million. Early 3G CDMA entrants continue to perform well. KDDI, the first CDMA operator in Japan, announced its sixth consecutive month as the leading Japanese operator in net subscriber additions, and now has approximately 14 million subscribers on its 3G network. Better coverage and new handsets have accelerated WCDMA (UMTS)uptake and resulted in over 4 million cumulative subscribers in Japan and Europe at the end of the quarter. NTT DoCoMo, the largest Japanese operator, added approximately 724,000 subscribers to its 3G FOMA network in March 2004, for a total of over three million WCDMA subscribers. In South Korea, local number portability and compelling 1xEV-DO handsets contributed to the highest monthly net additions in two years and a 1xEV-DO base that now exceeds 6.4 million subscribers. The United States CDMA market continues to grow, benefiting from local number portability and the popularity of camera phones and color screens. Finally, we experienced continued growth in China and India and strong growth in Brazil, propelled by low-priced MSM6000-based entry level phones.
"This quarter, we matched the prior quarter's record high by shipping approximately 32 million MSM phone chips; however, worldwide demand for our chipsets exceeded our supply, particularly the MSM5100 and MSM5500. We anticipate supply to better align with demand over the course of the next two quarters.
"Research and development continued at high levels. Both the CDMA2000 1X Revision D and the 1xEV-DO Revision A standards were completed, each supporting peak data rates of 3.1 Mbps on the forward link and 1.8 Mbps on the reverse link. We publicly demonstrated CDMA2000 1xEV-DO Gold Multicast, allowing multimedia content to be sent simultaneously to many users; MediaFLO, an end-to-end product and service delivering multiple channels of video conveniently accessed by an on-screen channel guide; and Quality-of-Service features supporting greatly enhanced performance for Voice-over-Internet Protocol (VOIP), push-to-chat, and video telephony. We believe these and other projects will drive further expansion of 3G CDMA, subscriber migration from 2G systems, and higher revenues."
Revenues for the second quarter of fiscal 2004 grew $199 million compared to the second quarter of fiscal 2003, including a $130 million increase in QUALCOMM Technology Licensing (QTL) segment revenues and a $65 million increase in QUALCOMM CDMA Technologies (QCT) segment revenues. QTL revenues increased over the prior year due primarily to greater phone and infrastructure equipment sales by our licensees. In the second quarter of fiscal 2004, our licensees reported CDMA phone sales for the first quarter of fiscal 2004 of approximately 37 million units, compared to 27 million units in the second quarter of fiscal 2003. QCT sold approximately 32 million Mobile Station Modem (TM) (MSM(TM)) phone chips in the second quarter of fiscal 2004, compared to 28 million in the second quarter of fiscal 2003.
http://www.3g.co.uk/PR/April2004/6978.htm
Telecommunications: Qualcomm: Chip supplies to improve by Sept.
"We expect that by September, on a gradually improving basis, we'll get out of the shortage issues and be able to supply increasing demand," Thornley said.
Driving demand in Latin America is Brazilian mobile operator Vivo, and Qualcomm has revised upwards its estimated for handset shipments to 17 million units in calendar 2004, he said.
Vivo has suffered "to some degree" from the supply shortages, as "they have been somewhat constrained by the number of phones they can get, so it's very much a supply limited market," Thornley said.
Qualcomm is in talks with foundry suppliers to get new additional wafer starts to boost chip supplies in the short-term, and over the long-term is betting on migrating customers to smaller, more efficient chipsets, he said.
On Wednesday, Qualcomm reported net profits of US$488mn for the second quarter of its 2004 fiscal year ended March 28, up 39% from the first quarter and up 374% from the second fiscal quarter 2003.
Revenues were US$1.2bn in the fiscal second quarter, up 1% from the first fiscal quarter of 2004 and up 20% compared to fiscal 2Q03.
Net profits were distorted by the extra expenses at the Qualcomm Strategic Investments (QSI) unit in the same quarter of 2002 related to the stake in Brazil's Vesper, which Qualcomm has since sold. Excluding the QSI segment, net profits for this quarter were US$442mn, up 6% from the first quarter and up 41% from 2Q03.
The financial results reflect the strong acceptance and rapid global growth of 3G CDMA, Qualcomm chairman and chief executive Irwin Mark Jacobs said in the statement.
Latin America was a "microcosm" of Qualcomm's global results, Thornley said.
Source: Business News Americas (BNamericas.com)
http://www.latinfinance.com/default.asp?page=1234&storyid=2798072&s=Telecommunications
No. 1 CDMA Wireless Phone in the World
19th April , 2004
ASIA : In 2003 LGE had the world's largest market share in CDMA phones. According to U.S. market researchers Strategic Analytics (SA) last year LGE sold the world market 21.3 million CDMA phones for a 21.6 percent market share.
In rocketing to the top position it left behind 2002's second place competitor Motorola and even surpassed Samsung Electronics. This success is due to differentiated and powerful marketing efforts in key overseas markets such as North America, India, Brazil, and China.
In 2003 Samsung Electronics of Korea only sold 20.4 million units for a market share of 20.7 percent. Motorola of the United States sold 17.75 million units for a third-place 18 percent market share.
http://www.3g.co.uk/PR/April2004/6948.htm
CDMA chipset shortage hits second-tier handset makers
Qualcomm’s inability to meet demand for its lower-end CDMA handset chipsets is causing production problems for many Korean handset makers, particularly medium-sized firms upon whom the brunt of the shortage has fallen.
It seems Qualcomm underestimated demand for its 5000 series chipsets, apparently forecasting stronger demand for its 6000 series. Smaller makers at the lower-end of the market have had their orders cut by up to 50%, said Tae-kyung Hwang general manager, project department, at the Information and Telecommunications Intellectual Property Association, which has taken the lead in supporting second-tier handset makers.
These companies have had to live with the shortages since Qualcomm is the only CDMA chipset supplier in Korea, although it subcontracts manufacturing to IBM and two Taiwanese companies. Many firms hesitate to complain as they’re concerned about disruptions in their already reduced orders.
In Japan, where Qualcomm now supplies 100% of the CDMA chips used in KDDI handset models, manufacturers are also suffering, but the problem is less serious because most have already moved to newer, more powerful chips. The shortage is expected to continue until June when all suppliers for Japanese carriers move from the 5000 series to the 6000.
Samsung and ETRI have been developing chips for the handsets as have Texas Instruments, but as the record in Japan shows, it’s difficult trying to compete with Qualcomm. Fujitsu and Motorola tried but failed to successfully develop their own chips. Sony and Panasonic launched products with their own chips but ultimately switched to Qualcomm as did Denso and Kyocera after using competing chipsets.
The widespread dissatisfaction in Korea over the royalty payments being made by Korean makers to Qualcomm, which holds over 400 key CDMA patents, is partly because Korea has played a major role in the success of CDMA worldwide. It is estimated that in 2002 Qualcomm collected nearly $4 billion in royalties in Korea.
One issue is that the royalty guidelines based on the net selling price (NSP) were set before the launch of handsets with cameras and other sophisticated features.
“The royalty guideline based on the NSP is irrational because we must pay a royalty even on expensive add-ons like camera modules and sound cards, which have nothing to do with Qualcomm,” argues Hwang, who believes that Samsung and LG Electronics have special lump-sum deals with Qualcomm.
The other point of contention is the optional royalty arrangement that Qualcomm created after long negotiations with China but also openly offered in Korea. Makers would pay a 7% royalty on exports for the first three years and 5% thereafter. This arrangement favors fledgling CDMA handset businesses. For Korean makers, which have built up substantial export businesses over several years, the burden of paying an extra 1.25% royalty for three years is unacceptable and they aren’t interested in the new deal (they are currently paying 5.75%).
Even shifting to the manufacture of W-CDMA handsets won’t help Korean makers in this respect because Qualcomm operates the same royalty guideline for W-CDMA. They may even sometime in the future have to pay additional royalties on the W-CDMA patents held by NTT DoCoMo, NEC, Fujitsu and Motorola.
Meanwhile, Qualcomm’s share of the W-CDMA chip market is growing. Its MSM6250 W-CDMA chipsets are being used by Sanyo and Toshiba and have recently been selected by Chinese manufacturers ZTE and Hisense. When NTT DoCoMo upgrades its FOMA network next year to meet UMTS standards, Qualcomm expects to gain further market share in Japan.
As for Korea, despite all the hype about the success of CDMA, Korean makers last year actually sold more GSM handsets than CDMA phones. This year they expect their GSM sales to increase nearly 50% and pass the 100-million mark.
– Staff writer
http://www.telecomasia.net/telecomasia/article/articleDetail.jsp?id=92460
Has Qualcomm's Time Come: Part II
Yesterday, Dave Mock looked at the underlying value in Qualcomm's high-quality earnings and cash position. Today, he looks at company operations and explains why he thinks Qualcomm has a bright future.
In the first part of my analysis of Qualcomm (Nasdaq: QCOM), I suggested that Qualcomm's stock price may appear more expensive than it really is. In this article, we'll take a more qualitative look at what's fueling Qualcomm's current growth cycle. While we want to cover all the positive aspects of the business, we'll also be prudent in acknowledging potential risks to various areas of the company's business.
Let's look at what's behind Qualcomm's recent earnings that has been fueling the stock lately -- four trends that I see as likely to continue through 2004.
Trend #1: Qualcomm's income is largely driven from wireless handset sales, which are booming.
Bill Mann's July 2003 article on Qualcomm stated concerns about the excesses built into the telecom sector as a whole. Overzealous bids for 3G licenses at the height of the late 1990s euphoria put many operators deep in the red. Additionally, with severe overcapacity built up in the networking sector, resumption in healthy spending levels was certainly a ways off.
But Qualcomm's more significant revenue exposure is to handset inventory levels, with network equipment making up only a fraction of the company's income. Trends in handset sales are driven more directly by consumer sentiments. So while the market for routers, switches, and even cellular base station equipment may be depressed for years, handset demand moves to a different beat -- one that is much faster paced.
I'd even suggest that the telecom malaise may have indirectly benefited handset sales. For carriers, recouping sunk costs is of utmost importance. If an operator builds a network, they pay for it whether anyone uses it or not. There's much more incentive to get customers signed up and paying for services; you can't dig yourself out of a hole without a shovel. So there's a strong incentive for debt-laden operators to sell handsets.
Recent reports in the sector show a significant recovery in handset sales, with solid growth expected to continue. Research firm Gartner Inc. reported a nearly 21% increase in worldwide handset sales to 520 million in 2003. They see 2004 sales increasing to a whopping 580 million units driven by new features such as integrated cameras. Each CDMA handset sold brings royalty to Qualcomm, and many units include the company's chipsets as well, bringing further revenue.
Of course, a contraction in overall handset sales will hurt Qualcomm's business. But we're early into a new cycle of expansion in this area, where demand is outstripping supply, so the concern is more in the long term.
Trend #2: The majority of Qualcomm's business comes from Asia, an area of high replacement cycles.
Qualcomm's most recent fiscal year had a whopping 43% of revenue derived from South Korea and another 15% from Japan. The percentage of revenue from international customers is growing each year as well, topping 78% in fiscal 2003. The evolution of mobile services in Asian nations has continued to propel Qualcomm's revenue higher as consumers in these markets tend to be early adopters of new technology and premium services.
The Asian markets in particular have short handset turnover rates -- the number of months wireless users own a handset before upgrading. In Korea and Japan, 18 months is the norm, compared to 24 to 36 months in other regions such as the U.S. and Europe. Each of those new handsets brings royalty to Qualcomm. Additionally, upgrades tend to move toward higher-priced handsets, which benefits Qualcomm further since its royalty is based upon the average selling price (ASP) of a mobile device.
The downside of this situation is the heavy -- and growing -- dependence on a few customers and the concentrated risk. Samsung, Motorola (NYSE: MOT), LG, and Kyocera (NYSE: KYO) make up the majority of Qualcomm's revenue. Samsung has quietly been developing CDMA chipsets for its own use, and Kyocera's obligation to source a majority of its CDMA equipment needs with Qualcomm expires at the end of 2004. There's no indication that any of these customers are eager to jump off Qualcomm's list, but new sources of competition may still pressure sales and/or margins.
Trend #3: Significant revenue from WCDMA is now showing.
Skeptical analysts have historically opined about Qualcomm's ability to charge royalty for a flavor of its technology -- called WCDMA -- that was purposely developed to circumvent its intellectual property. When announcing recent earnings, Qualcomm reported that royalties from WCDMA products made up 12% of its total royalty income. This product royalty stream is the one that everyone hung their hat on when Qualcomm's stock soared to extreme heights in 1999.
Well, royalty income from WCDMA shipments took years longer to flow in than most expected, due to delays in rolling out networks based upon the technology. But with many European and Asian carriers now bringing WCDMA networks online, Qualcomm is starting to benefit substantially. The 12% figure is significant and, again, this positive trend should continue. The revenue stream derived from this technology segment is also significant in that it will help spread Qualcomm's earnings base across more regions and customers -- reducing the risk cited above.
Currently, there are several major companies and industry bodies negotiating royalties for WCDMA equipment, and there is a chance that pressure will be put on Qualcomm to lower its rates or join a more dilutive structure for IP compensation. Some cite the coming expiration of Qualcomm's fundamental CDMA patents issued in 1989-90 as a concern for the company's licensing and royalty revenue as well.
But Qualcomm has the momentum of dozens of contract agreements signed with equipment manufacturers, so I see this risk as remote. Still, it's good for investors to monitor the state of the industry in this area as circumstances could change.
Trend #4: New markets are developing slowly but surely.
China and India have been on many CEOs to-do list for years as the regions of vast populations have tantalized telecom companies. Qualcomm has been working in both these regions for well over a decade now, longer than many peers. In fact, its solutions were initially targeted to these developing nations as the company was less certain of its chance of success in the domestic market.
Qualcomm has recently scored significant design wins in India and has seen China's CDMA subscribers go from less than a million to more than 20 million in only a few years. While the royalties and revenues earned from these developing markets is less than those earned in premium markets in the U.S. and Asia, the volume scale more than makes up for the shortfall. Continued growth in wireless services in these regions should provide significant revenue for Qualcomm for years to come.
On the downside, emerging markets are inherently risky. The delicate dance between the U.S. and China has been anything but boring lately, and probably always will. Recent rumblings over semiconductor tariffs and boycotts in the Wi-Fi arena have reminded investors that business in China should never be taken for granted. Qualcomm's CDMA could end up being a pawn on a larger playing field of trade relations with the U.S., China, and its neighbors, placing future revenues from this area at risk.
Other risks
On top of these trends that are driving near-term results, there are some long-term issues investors should keep in mind with Qualcomm. Let's start with discontent over royalties. South Korea in particular has made their displeasure with paying ongoing royalties to Qualcomm more public lately. Many manufacturers feel that Chinese companies have been given a better deal on terms of their royalty contracts, placing Korean manufacturers at a disadvantage. Qualcomm has to work hard at keeping customers happy and relationships in the "win-win" category.
Extensive details of the terms of confidential license agreements have been showing up in the Korean press lately, making it more difficult for Qualcomm to address concerns. The company took competitor Texas Instruments (NYSE: TXN) to court on a lesser violation of disclosing proprietary terms of a contract, though there is a stronger competitive element in the latter case that pushed Qualcomm to action.
Then there's the question of chipset market share. New competitors Texas Instruments, Samsung, and Nokia (NYSE: NOK) are all pushing their own chipset solutions for CDMA. Qualcomm acknowledges that its more-than-90% market share in CDMA chipsets will likely shrink, but the company is estimating that the overall effect of volume growth in CDMA and new opportunities in WCDMA chipsets should end in an overall net positive for the company.
Qualcomm also boosted R&D spending significantly this year to shore up its offerings in chipsets and software solutions. A recent hiring fair also targeted hundreds of engineers to fill open positions. While many industry watchers question Qualcomm's ability to capture its self-proclaimed goal of 50% market share of WCDMA chipsets, the company has a strong history of capitalizing on big opportunities. Even if the company falls short of the 50% goal, it is well known for achieving well beyond what most companies would settle for.
The Foolish bottom line
Qualcomm is a very impressive company and noteworthy competitor in the wireless market. For the first time in more than four years, I believe it is an investment that's finally worth a look.
Fools on the Qualcomm discussion board dispense some of the best analysis of the company on the Web. Check out the details and join the discussion here.
Dave Mock wrote the book on Qualcomm -- literally. His corporate biography on the company, The Qualcomm Equation, will be published by AMACOM in the fall. Dave owns shares of Motorola, and can be reached via email. The Motley Fool is investors writing for investors.
http://www.fool.com/news/commentary/2004/commentary040408dm.htm?source=eptyholnk303100&logvisit=...
Has Qualcomm's Time Come?
Taking a fresh look the company, one Fool -- a past bear on the stock himself -- breaks from the pack to make a case for the company in the first part a two-part analysis.
In January 2000, fellow Fool Bill Mann showed up at the right place at the right time, calling Qualcomm's (Nasdaq: QCOM) top that still holds today. Shares had risen more than 25-fold in the prior year, becoming the poster child for what many now know as the years of irrational exuberance. Bill concluded that Qualcomm's share price was drastically inflated, discounting decades of growth.
More recently, in July 2003 Bill revisited Qualcomm and noted something that is often forgotten in investing: It is possible to love a company but hate the stock. In this case, Qualcomm's stock was trading around $37 per share at the time, valuing the company at just under $30 billion. More than three years after his initial assessment, Bill saw a Rule Maker in almost every measure, but the price of shares and the anemic state of the global telecom market still told him to look for greener pastures elsewhere.
Like Bill, I love the company but have long hated the stock. I've been bearish on Qualcomm's stock since the peak in early 2000, due to its inflated value relative to conditions I saw in the market. But my bearish tendencies were already fading by mid-2003 when I saw a different Qualcomm and a different market shaping up. Both were maturing -- Qualcomm has been steadily moving into new growth areas while the wireless sector had been recovering rapidly.
With recent market giddiness virtually eliminating the chance of finding undervalued stocks in the wireless sector and new opportunities for growth showing for Qualcomm, the stock looks to me to be one of the better wireless plays at this point. So let's delve into two major areas, answering the question of whether the stock is still "overpriced," and what future growth is reasonable to expect from the company.
What makes a stock expensive?
Calling a stock "cheap" and "expensive" is always relative. Cheap compared to what? Expensive compared to peer stocks, or expensive compared to some reasonable return on investment?
I still say Qualcomm stock is on the expensive side when held up against similarly sized companies. But the price is more moderate when referenced to the potential still packed in the wireless sector. By comparison, Qualcomm stock is also now more reasonably priced than many wireless peers. This was not the case 12 to 18 months ago when many other wireless plays were selling at a big discount. So if you're already diversified and determined to put a portion of your portfolio to work in the more risky wireless sector, I'd say Qualcomm is worth a look.
But with a current P/E over 50 and forward P/E in the mid-30s, how can investors not feel like they are overpaying for a great company like Qualcomm? Well, the P/E ratio doesn't tell the whole story -- we need to dig deeper. Matt Richey's recent article made an outstanding case for looking at elements of hidden value in companies. While Qualcomm is not necessarily a value play, the company's impressive cash flow and billions in cash distort the conventional picture of value.
I believe Matt's enterprise value-to-free cash flow ratio (EV/FCF) would be a good metric to apply to Qualcomm, a company that generates billions in cash flow each year and even now pays a dividend (though still small). With more than $5 billion in cash and equivalents, Qualcomm's enterprise value comes in roughly at $45 billion. Free cash flow for the trailing 12 months comes in at $1.7 billion, yielding a EV/FCF ratio of around 26.5 -- not bad compared to the S&P 500 average of 23.4. Certainly not cheap, but not out of the park.
The margins in Qualcomm's business have remained strong, and expanding business has led to a recent surge in income. Still, the company sees long-term stability in cash flow -- enough to fund a $1 billion stock repurchase plan and pay out more than $130 million in shareholder dividends. CEO Irwin Jacobs notes that Qualcomm has more than enough cash to fund research and development (R&D), and the excess would be best used by returning it to shareholders (when's the last time you ever had too much cash?).
To balance the optimism, though, keep in mind that Qualcomm's investment arm -- Qualcomm Strategic Initiatives (QSI) -- has been regularly eating cash. Investors shouldn't simply settle for a metric that looks at cash flow without looking at all areas of the business that can either consume or provide cash. The company's margins will likely come under increasing pressure in the future as well, so don't leave this scenario out of a more detailed analysis. Overall, however, I believe looking at Qualcomm's maturing business in this manner is much more accurate than simply buying and selling based upon a simple P/E.
Quantitative vs. qualitative
Investing in Qualcomm has rarely been a question of company performance -- it's been a question of the premium paid for that performance. The company has historically outperformed the market, and recent financial achievements continue to be well above par. After peaking in 1999 and declining for two years with the rest of the telecom market, double-digit revenue growth has returned and earnings have continued to grow as well.
Yet at the risk of sounding very foolish, I suggest that a quantitative analysis on Qualcomm only gets an investor so far. Not that prudent financial measures should be tossed aside or subverted to subjective guessing, but I firmly believe metrics must be looked at in a larger context. Even the exercise of looking at value in cash flow begs investors to question the quality of cash flow and expectations for its continuance. Certainly, we don't want to jump into a company based upon temporarily inflated cash flow from a variety of "onetime" items such as legal judgments or tax treatments.
I believe it's important, therefore, to look at Qualcomm's current position in its addressed markets and look at the potential for continued success in each area. This more qualitative look at the company and the industry should help an investor weigh the relative risks going forward. I think it's also important to play devil's advocate by looking at all the risks facing the company -- even remote risks. How do you know if an investment is solid unless you attempt to shoot a few holes in it?
So in part two, which will be published on April 8, I will suggest areas that I think are important to measure Qualcomm on a more qualitative basis. The emphasis will be on areas of the business where it generates significant income or has the potential to do so. We want to determine the likelihood that a particular stream of income will continue, diminish, or potentially expand. Then we should have a solid picture of risks vs. potential rewards in the stock -- the basis for a Foolish investment decision.
Fools on the Qualcomm discussion board dispense some of the best analysis of the company on the Web. Check out the details and join the discussion here.
Though he doesn't own shares in the company, Dave Mock wrote the book on Qualcomm -- literally. His corporate biography on the company, The Qualcomm Equation, will be published by AMACOM in the fall. Dave can be reached via email. The Motley Fool is investors writing for investors.
http://www.fool.com/news/commentary/2004/commentary040407dm.htm?source=eptyholnk303100&logvisit=...
Nokia market losses fail to dent sector confidence
Tuesday April 6, 12:03 pm ET
By Eric Auchard
NEW YORK, April 6 (Reuters) - A sales shortfall by mobile phone market leader Nokia (NOK1V.HE) sent its stock tumbling 18 percent but its impact on the broader wireless sector was confined to the Finnish company's most immediate suppliers.
The damage done to investor confidence in Finland's Nokia, which for years has served as the world's bellwether stock in the wireless industry, did little to undermine the growing confidence in the sector as a whole.
"Nokia is a blip. Other stocks in the sector are actually quite strong," said Ren Zamora, an analyst with Loop Capital Markets in Chicago.
Nokia said first-quarter sales fell 2 percent to 6.6 billion euros ($8.13 billion) against 3 percent to 7 percent growth it had expected. Earnings are now expected to be at the low end of previous expectations of 17 to 19 euro cents, it said.
Nokia blamed its troubles on the growing percentage of lower-priced phones it sold during the first-quarter, which cut into operating profits but has dampened sales very little. It acknowledged it was losing market share even as the industry as a whole performed well.
"A lot of people are taking the Nokia warning as really quite specific to Nokia's handset business," Zamora said.
Nokia (NYSE:NOK - News) stock fell $3.81, or 18 percent, to $17.34 in heavy trading on the New York Stock Exchange (News - Websites) , where it was the most active issue.
Nokia's biggest chip suppliers also saw their stocks fall. Texas Instruments (NYSE:TXN - News) fell 5.3 percent to $29.30 and STMicroelectronics (Paris:STM.PA - News) fell 4.53 percent to $23.63, both on the New York Stock Exchange. RF Micro Devices (NasdaqNM:RFMD - News) dropped 5.4 percent to $8.42 on Nasdaq.
"They have a little more connection with Nokia and as a result are getting a little more sting this morning," Zamora said.
However, shares of rival equipment makers such as Qualcomm Inc. (NasdaqNM:QCOM - News), Motorola Inc. (NYSE:MOT - News) and Ericsson (Stockholm:ERICb.ST - News; NasdaqNM:ERICY - News) declined by only 1 percent or less amid recent signs that global demand for mobile phones is picking up steam.
"Companies like Ericsson, Motorola, Qualcomm and Comverse (NasdaqNM:CMVT - News) are all benefiting from favorable trends," said James Faucette of Pacific Crest Securities in Portland, Oregon. "From what we are seeing of the trends, the move up to new phones and accompanying increase in network capabilities is strong."
Zamora sought to separate the product problems in Nokia's handset unit from its smaller network gear business, which the company reaffirmed was expected to grow at 16 percent to around 1.4 billion euros.
"Ericsson isn't getting hit as much because the network business at Nokia looks like it is doing very well," Zamora said. "In a lot of ways it is one more promising sign. It looks like the network business is definitely turning," he said.
He said this confirmed his thesis that the network business of rival Ericsson was showing clear signs of improvement. Zamora raised his first-quarter profit estimate on Ericsson to 12 cents an American Depositary Share from 7 cents previously.
Faucette said that Nokia must reassert itself in the market for mid to high-end phones. "They are going to have to be more aggressive in their designs," he said.
Nokia's strength is in manufacturing low-priced "bar" phones but demand is increasingly shifting to "flip-open" phones in many markets, he said.
http://biz.yahoo.com/rc/040406/tech_nokia_sector_1.html
Why Qualcomm Keeps Ringing
Demand for its cell-phone chip technology has been stronger than expected, and it isn't likely to slow down anytime soon
As they like to say in sports, 2004 was supposed to be a "rebuilding" year for Qualcomm (QCOM ). Analysts expected that sales of wireless phones powered by Qualcomm's patented CDMA technology would flatten, causing the San Diego company's growth to slow. What's more, they predicted, Qualcomm would have to scramble to keep its technological edge in CDMA chips -- which account for most of its $4 billion in annual sales -- as competitors started to move into the market. Advertisement
Instead of stumbling, though, Qualcomm has been scoring one slam dunk after another. CDMA carriers such as Sprint PCS (PCS ), China Unicom (CHU ), and Verizon Wireless -- a joint venture between Verizon Communications (VZ ) and Vodaphone (VOD ) -- have been signing on new subscribers at unexpectedly high rates, causing a run on cell phones and a mad rush of orders for Qualcomm's chips.
On Feb. 23, Qualcomm increased its estimates for the third time in the past year. After having predicted sales in its second fiscal quarter (ending Mar. 28) would grow no more than 8% year-over-year, Qualcomm now expects sales to grow 13%, to $1.2 billion. And it predicts earnings will jump 24%, to $378.4 million, or 47 cents a share. This performance has helped put Qualcomm on the lates BusinessWeek 50 list of the country's top-performing companies at No. 17.
UPSIDE LEFT. Investors have phoned in their votes of approval, driving Qualcomm's shares up to $67 and change from around $54 since the beginning of 2004. The stock has nearly doubled in the last 12 months. On Mar. 2, Qualcomm sweetened the pot for investors by upping its quarterly dividend 43%, to 10 cents per share.
Is it too late to get a piece of Qualcomm's fast-rising fortunes? Not necessarily. True, the stock is trading at a pricey 34 times fiscal 2005 earnings estimates. But Qualcomm's financials could have plenty of upside, especially if the long-awaited migration of most of the world's cellular carriers to W-CDMA -- a faster variant of Qualcomm's technology -- takes off toward the end of 2004, as many analysts say it could. Qualcomm gets an estimated 5% royalty of every CDMA device sold, and it supplies 90% of CDMA chips.
"There are a lot of drivers coming along with full force that could all of a sudden make Qualcomm's market much larger," says Robert Gensler, a portfolio manager of the T. Rowe Price. He says Qualcomm could achieve 20% annual earnings growth for the next five years. (T. Rowe Price owns shares of Qualcomm in many of its funds.)
NEW RIVALS. Investors should be wary of some significant risks Qualcomm faces. The first is the so-called "average selling price" (ASP) of cell phones, on which Qualcomm's licensing royalties are based. When the ASP falls, Qualcomm's royalty revenues fall. Lately ASPs have been holding steady, because strong sales of low-end phones in developing countries such as China and India have been offset by sales elsewhere of more pricey handsets that can take photos, shoot videos, and play games. If demand for those high-end phones falls, ASPs will drop, and Qualcomm will suffer.
Qualcomm is also facing competition in CDMA chip manufacturing. Last year, Texas Instruments (TXN ) teamed with Nokia (NOK ) and STMicroelectronics (STM ) to make a line of CDMA chips that TI will market to other cell-phone manufacturers. TI has yet to score a major customer. Still, Qualcomm founder and CEO Irwin W. Jacobs isn't taking the competitive threat lightly. "It's probable they'll gain some share," he says. "We'll work hard to compete with them." (For a Q&A with Jacobs, see "The Handset as 'Very Powerful Computer'".)
The cornerstone of Jacobs' plan is to continue to lead his rivals in introducing innovative new CDMA products. Qualcomm is working on improving its chips, so they can support a host of nonvoice applications -- such as video, position location, and e-mail -- with as little battery power as possible. And Qualcomm has recently started selling "multimode" chips, which allow CDMA customers to use their wireless phones in cities that are powered by GSM, the prevailing European wireless standard.
GOT THE STOMACH? Qualcomm is also working on expanding its line of W-CDMA chips. "All this technology continues to evolve, and we just have to stay ahead," Jacobs says.
Investors who stuck with Jacobs so far have been well-rewarded. Those who can stomach the risk of an unpredictable and increasingly competitive wireless industry might want to grab onto his coattails now. If the father of CDMA succeeds in fulfilling the ambitious growth potential he envisions, shareholders may reap more gains down the road.
Weintraub is a correspondent in BusinessWeek's Los Angeles bureau
Edited by Beth Belton
http://yahoo.businessweek.com/technology/content/apr2004/tc2004046_9562_tc055.htm
Not happy with WAPI
After smoldering for months, the dispute over China’s new mandatory Wi-Fi security protocol has suddenly flared into the most serious Sino-American tech trade issue since the long tussle over CDMA.
At this rate, it is heading before a WTO tribunal. But Inside Line predicts that won’t happen. This issue is more about China testing its strength by making a run at global vendors than about real encryption or technology issues.
The Standardization Administration, an agency under the State Council, and the State Encryption Management Commission, which are driving the issue, announced the new standard, the WLAN authentication and privacy infrastructure (WAPI), last May, to be implemented by December 1, though they have pushed back the deadline six months to June 1.
Under the rules, foreign vendors must work with one of 24 nominated domestic vendors, such as Legend or Huawei, to develop products for the market.
They say the new standard is required for security purposes.
China has not ratified the security protocols set down by IEEE for the 802.11a, b and g family of standards. But international vendors have, including chip leader Intel, which is the most vocal in opposition.
Intel has spent the past three years pushing its Centrino chipset, which it hopes to embed in nearly every laptop in the world. Obviously, if WAPI goes ahead, that’s not going to happen.
An Intel spokesperson told Inside Line that despite the impasse, Intel is working with other players and the Chinese authorities to try to come to an agreement on a standard, but can’t see how it can solve the technical and interoperability issues.
That’s what the parties are saying on the record.
The US vendors and their government really see it as shakedown – a protectionist scam in which foreign players are forced to share their expertise with domestic vendors.
Hypocritical
What’s interesting is China’s reading of the market. They have decided the vendors need China more than China needs the vendors. As a divide-and-rule strategy, it could be a masterstroke; US-based Texas Instruments and Atheros Communications, and Taiwanese developers D-Link and CyberTan all reportedly support WAPI.
But when set against China’s black-letter WTO commitments and its espousal of the “open policy,” it is frankly disappointing if not downright hypocritical. Other major markets, such as Europe or Japan, could make the same arguments in favor of their own standard, but choose not to.
Lining up with Intel is chipmaker Broadcom and industry bodies like the Semiconductor Industry Association (SIA) and the US Information Technology Industry Council. Cisco is, for the time being, sitting this one out.
But WAPI is also on Washington’s radar – a sign that the US sees it as a dangerous precedent. A letter from Secretary of State Colin Powell, Commerce Secretary Donald Evans and US Trade Representative Robert Zoellick went to Beijing in March rightly describing the new measure as a trade barrier and urging a compromise.
The Chinese position was aired by Jiang Qiping, secretary-general of the Information Research Institute of the Chinese Academy of Social Sciences. He told China Business Weekly: “It makes no sense for a country to have its core information technology controlled by others while the domestic market is wide open to foreign players.”
One would have thought that a liberalized market by its nature was open to domination by players foreign or local.
In their defense, the Chinese could point to their unhappy experience with CDMA – technology foisted on them as an equally cynical condition of their entry to the WTO. Unicom, as the fall guy, has spent $2 billion on CDMA network equipment and continues to bleed money.
The MII has played off foreign vendors quite astutely over the past 24 years, creating from a blank slate one of the world’s biggest communications industries, with its own champions.
It also picked up early work done by Siemens and Alcatel and proposed the technology as an alternative 3G standard, known as TD-SCDMA. It can now use that as a lever to push down the price of W-CDMA and cdma-1x license fees.
Their gameplan on Wi-Fi is sharp on tactics but short on strategy. It also doesn’t do much for domestic consumers, denying them access to the best technology at the best market prices.
At the National People’s Congress in early March Premier Wen Jiabao announced a new “people first” economic and development strategy. The WAPI requirement treats the WTO, foreign vendors and Chinese consumers with equal measures of contempt.
Robert Clark is former group editor of Telecom Asia and director of independent consultancy Protocol Research rclark@protocolresearch.com
http://www.telecomasia.net/telecomasia/article/articleDetail.jsp?id=89901
Mobile Industry Set for Growth
04.02.04
LONDON -- According to a new survey published by ARC Group, the mobile industry is optimistic for the year ahead.
Of the industry professionals surveyed for the 3GSM 2004 Survey, 85% expected their company's profitability to grow in 2004, with 16% convinced it would grow by more than 20%.
Mobile Operators responses reinforced this sense of optimism, with 74% of the 157 operators surveyed believing that their CAPEX would increase this year.
However, the survey also highlights some issues regarding 3G's impact in 2004. Over 50% of respondents believe that 3G will have little influence this year, whereas only 8% thought it would be very influential.
Only 35% believed that 2004 would see their home operators launching either UMTS or EDGE networks. And an overwhelming majority in all regions believed that less than 5% of operators' subscribers would be using 3G services this year.
ARC Group Managing Consultant, Karen Walsh, says "Although clearly optimistic for the year ahead, the mobile industry is now underpinned with a sense of realism.
Although W-CDMA services are scheduled for launch before the end of 2004 in several areas, the industry is not convinced that 3G will have much impact this year. Respondents also felt that handset availability was the largest potential barriers to 3G services uptake."
Other key findings from the 3GSM 2004 Survey include:
The majority of respondents thought that Asian manufacturers would continue to increase their market shares in 2004, with almost 50% believing they would increase their shares by between 10 and 20%.
Mobile enterprise solutions will be the hottest mobile content & applications of 2004, according to almost 35% of respondents.
The vast majority of respondents thought that content brand owners would provide an opportunity for mobile operators rather than a threat.
Time-to-market and available applications will be the key issues affecting handset vendor success in 2004.
Wi-Fi and Bluetooth technologies were the top two choices for almost all respondents when asked what would be the two most widely used short-range wireless technologies in 2004.
Only 12% of industry professionals believed that Wi-Fi hotspots would have a significant impact on their business strategy in 2004.
http://www.unstrung.com/document.asp?doc_id=50452
Banc ofAmerica charged with SEC fraud..
Courtesy of dopeysneezygrumpydoc from Qualcomm Yahoo Board
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4686818&tid=qcom&sid=468...
This is Ridiculous and Full of BS! MMs are trying to bring down Q price.
http://www.thestreet.com/_yahoo/tech/semis/10151776.html
Qualcomm Cut at Banc of America
By TSC Staff
4/1/2004 8:31 AM EST
The heat coming off Qualcomm (QCOM:Nasdaq - commentary - research) in recent months is likely to dissipate and investors should reconsider taking new positions in the stock, a Banc of America analyst urged Thursday.
The brokerage lowered Qualcomm to neutral from buy and lowered the price target to $60 from $72, warning that the wireless technology outfit is unlikely to sustain its blistering earnings pace indefinitely. The shares were recently down 73 cents, or 1.1%, to $65.56 on the Instinet premarket session.
Qualcomm's shares are up 23% this year and up 93% from March 2003, as the company has twice raised earnings estimates during the first quarter. BofA warned that momentum is likely to slow in the next quarter, a trend that could cause its valuation to shrink.
The shares currently trade at 37 times the 2004 Thomson One Analytics consensus earnings estimate of $1.76 and 35 times the 2005 estimate of $1.85.
Banc of America said handset sales remain brisk, although it cut its estimate of CDMA phone sales to 147 million from 150 million this year. Qualcomm collects royalties on cell phones that use its code-division multiple access algorithms. The brokerage cut its 2005 CDMA estimate to 165 million from 107 million.
Banc of America has done investment banking for Qualcomm in the past.
Reliance Info, Qualcomm pact likely
March 31, 2004 19:39 IST
Reliance Infocomm Ltd is expected to enter into a technical collaboration with US-based Qualcomm Inc by August this year for usage of its CDMA-based evolution data optimised (EvDO) technology in the latter's telephony operations.
"We are in discussions and a final deal is expected to be signed by August or September," Reliance Infocomm sources said on Wednesday.
EvDO is a niche broadband technology, which enables connectivity of around two MB per second over wireless networks.
If the deal falls through, Reliance Infocomm would use the technology for its broadband initiatives in the country, they said, adding this would result in bypassing of other technologies.
The use of EvDO is also expected to help Reliance Infocomm, which uses CDMA 1x technology for its Wireless in Local Loop operations, migrate over to 3G technologies effortlessly, they added.
Code Division Multiple Access-1x is the first generation of technologies of the CDMA 2000 family and Qualcomm was expected to roll out CDMA 2x and 3x, the company is said to be restraining from it as part of its standardisation process.
Reliance Infocomm is also planning to set up call centers outside Mumbai and Chennai to meet its growing subscriber base, they said.
Even though, a final decision on this is yet to be taken, the company might set up call centres in eastern and northern parts of the country, they said.
http://www.rediff.com/money/2004/mar/31ril.htm
richbloem, in additions to what you said, I am bothering by the following facts that they don't want to disclose publicly:
1) <<Samsung Electronics, the world's third largest mobile phone maker, said it sold 20.4 million CDMA-based mobile phones in the domestic and overseas markets last year.
The company paid 816.5 billion won ($708 million) in royalties to Qualcomm between 1995 and late 2003, including 219.1 billion won in 2002, a South Korean lawmaker said in a parliamentary hearing last September, citing figures collected by the information ministry and from companies.>>
Based on the above information, the total revenue generated by using Qualcomm technology would have been:
816.5 billion won/.0525 = 15,552.38 billion won OR
$708 million/.0525= $13,485.71 million
2) <<LG Electronics (KSE:066570.KS - News) paid 424.3 billion won in royalties between 1995 and 2003, the lawmaker said.>>
The total revenue generated by using Qualcomm technology would have been:
424.3 billion won/.0525 = 8,081.90 billion won
Why the resulting REVENUE were not disclosed at the same time?
The reporter must have his own AGENDA, JMHO.
Seoul may intervene over Qualcomm royalties -reports
Tuesday March 30, 11:05 pm ET
SEOUL, March 31 (Reuters) - South Korea is considering taking action over reports that Qualcomm Inc. (NasdaqNM:QCOM - News) charges local firms more in royalties to use its wireless technology than Chinese rivals, media reports said on Wednesday.
Qualcomm said it was unable to comment on the issue and government officials could not immediately be reached to verify the reports.
China is the world's largest mobile market with 280 million subscribers and is considering whether to adopt Qualcomm's standard for third generation (3G) phones, a decision that could generate billions of dollars in sales of equipment and royalties.
The Yonhap News agency said it had obtained a copy of Qualcomm's contract with a Chinese firm that showed the Chinese firm paid 2.65 percent of the price of a mobile phone in royalties for the U.S. firm's patent based on CDMA, or Code Division Multiple Access, around half the 5.25 percent paid by South Korean firms.
"We're unable to comment due to a confidentiality agreement," said Kim Seung-soo, a Qualcomm spokesman in Seoul.
The South Korean government was considering counter measures after concluding Qualcomm had breached its promise to provide Korea with the most favourable treatment, the Chosun Ilbo newspaper reported, citing unidentified officials at the Information and Communication Ministry.
Officials in charge of royalties for technology at the ministry could not be reached for comment.
Qualcomm owns most of the patents based on the CDMA standard for wireless networking, which is most popular in the United States, but also widely used in Asia.
The San Diego-based company counts companies such as South Korea's Samsung Electronics Co. Ltd. (KSE:005930.KS - News) among its largest customers. It expected an increase of around 27 percent in CDMA phone sales worldwide this calendar year.
A Samsung official said the royalty issue was a matter for the government to deal with.
http://biz.yahoo.com/rc/040330/telecoms_korea_qualcomm_1.html
Wired into wireless equipment
Schwab SoundView ups Qualcomm, cuts Nokia
By Susan Lerner, CBS.MarketWatch.com
Last Update: 11:50 AM ET March 29, 2004
NEW YORK (CBS.MW) - In four years covering the stock, Schwab SoundView's Matt Hoffman has never carried the firm's highest recommendation on Qualcomm.
That all changed Monday but the move came at the expense of its competitor, Nokia.
Telling clients he believes the Nokia threat in CDMA, or Code Division Multiple Access, will diminish rather than grow in 2004, Hoffman upgraded Qualcomm (QCOM: news, chart, profile) to "outperform" from "neutral" while downgrading Nokia (NOK: news, chart, profile) to "neutral" from "outperform."
Still, both shares rose in morning trade: Qualcomm lifted $2.17, or 3.5 percent, to $63.93 while Nokia added 49 cents, or 2.5 percent, to $20.05, as Merrill Lynch said a number of data points indicate wireless handset volumes were strong this quarter -- which could have positive implications for both Qualcomm and Nokia, as well as Motorola.
Motorola shares (MOT: news, chart, profile) were better by 46 cents, or 2.7 percent, to $17.44.
"We think that the strong demand, especially in emerging markets, bodes well for Nokia and we see the company gaining market share this quarter (vs. the Dec. quarter) on the back of this strength," Merrill analysts Peter Dionisio and Tal Liani wrote in a research note. The analysts believe concerns about the poor rate of introduction of new phones by Nokia this year are "excessive."
Those trends would also benefit Motorola and Qualcomm, they said.
"On Qualcomm, while the manufacturing constraints create a more receptive environment for competitors Nokia and Texas Instruments (TXN: news, chart, profile), we believe it leaves very little room for disappointment in the near-term and should the company secure more manufacturing capacity in the near-term these shortages should not impact Qualcomm's long-term outlook," Dionisio and Liani said.
Back at Schwab SoundView, Hoffman was not so enthusiastic about Nokia.
"Contacts suggest the recent reorganization has been a distraction and helped lead to NOK's weak trade show season handset announcements," Hoffman said.
Recent checks, he noted, suggest price cuts made by Nokia in early February on high volume GSM products have not yielded the higher market share and unit volumes past reductions have delivered.
Furthermore, the company may also lose share in the CDMA market, he said.
GSM is the third-generation mobile phone technology standard in Europe while CDMA is the leading technology in North America.
"Given our view that 2004 will be a good year for handsets, and not a spectacular year like 2003 was, we prefer to own companies that are gaining market share, most notably Motorola, over market plays like Nokia," Hoffman said.
Although he believes it's difficult to see how Nokia can avoid share losses in the near-term, Hoffman said he would be surprised to find this is a permanent condition given the company's "superior balance sheet and management team."
In addition to the downgrade, Hoffman cut his price target on Nokia to $21 from $28 but said he expects the company's reorganization could show positive results by the second half.
With the diminishing threat from Nokia, Hoffman is feeling more confident about Qualcomm.
At the same time, the analyst noted that CDMA chip demand remains strong and the CDMA handset market is strong while wideband, or W-CDMA, opportunities approach.
"W-CDMA greatly increases QCOM's addressable market, and no matter what level of market share it takes in W-CDMA chips, it is all incremental to the zero percent market share it has in GSM chipsets (where TXN dominates)," Hoffman said.
Hoffman boosted his fiscal second quarter earnings forecast to 48 cents a share from 40 cents and his third quarter outlook to 38 cents from 32 cents.
He also lifted his price target for the shares to $75 from $55.
Susan Lerner is a reporter for CBS.MarketWatch.com.
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...
Guangdong Unicom may launch PTT services at the end of May
Shanghai. (Interfax-China) - Guangdong Unicom, a subsidiary of China Unicom, may officially launch Push-to-Talk (PTT) services by the end of this May at the earliest, Cheng Xiao, an official from Guangdong Unicom's General Business Office, told Interfax in an interview.
Both China Unicom and China Mobile have been investigating the potential of PTT wireless services, which allow two mobile phones to form a connection without having to be relayed through a mobile network. Subsequently, PTT services are less expensive than mobile services and also require less electricity than mobile services. China Unicom and China Mobile both began PTT testing late last year, but China Unicom has moved more quickly in developing PTT services based on its CDMA network.
"Of all the subsidiaries under both China Unicom and China Mobile, I think Guangdong Unicom will be the first operator domestically to provide PTT service," Cheng said. "We will soon finish the public tendering we initiated this March to buy PTT solutions."
Guangdong Unicom's public tendering for PPT solutions has attracted vendors such as Qualcomm, Vas Telecom Technology and Motorola. However, no results have yet been released. Mobile phone makers, including Kyocera, ZTE, LG and Motorola, are also prepared to provide PTT enabled cell phones for the Chinese market.
One of the major problems facing PTT services in China, however, is interoperability between different PTT enabled mobile phones. Different brands of handsets may not be PTT compatible even when they are on the same network. Meanwhile, the Open Mobile Alliance is set to release unified technology standards for PTT services worldwide. Until this standard is broadly implemented, however, interoperability will persist as a problem for PTT services in China.
Guangdong Unicom may launch PTT services at the end of May
China's first moon probe to blast off in December 2006
Interfax China launches China Media Investment Report 2004
China makes significant progress, but some problems remain severe, according to UN report
Press: Japanese plane has been keeping close watch on Chinese gas field
Superbrands to produce list of China's top 100 brands
PetroChina announces 48.4% jump in 2003 profits, "best ever" since IPO
Viacom signs agreements with CCTV and SMG
China to invest USD 2 bln to improve Yangtze River's freight capacity by 2020
"Green energy" on agenda at Shanghai forum
http://www.interfax.com/com?item=Chin&pg=0&id=5707273&req=
Qualcomm upgraded to "outperform", target to $75.
Monday, March 29, 2004 10:11:06 AM ET
Schwab Soundview
NEW YORK, March 29 (New Ratings) - Analysts at Schwab Soundview upgrade Qualcomm (QCOM) from "neutral" to "outperform." The target price has been raised from $55 to $75.
© 2004 New Ratings
http://www.newratings.com/analyst_news/article_402188.html
QUALCOMM and SnapTrack Receive Favorable Jury Verdict in Patent
Case
SAN DIEGO, March 29 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM), pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology, today announced that following a three week jury trial in the United States District Court in San Jose, California, an eight-person jury issued a unanimous defense verdict in favor of QUALCOMM and its wholly owned subsidiary SnapTrack Inc., on six of the seven claims at issue in a patent infringement lawsuit filed against them by Zoltar Satellite Alarm Systems. While the jury was unable to reach a unanimous verdict on the one remaining patent claim, QUALCOMM and SnapTrack have filed a motion for judgement as a matter of law, asking Judge James Ware, who presided over the case, to dismiss that claim from the case. The court has taken the motion under submission.
"QUALCOMM is appreciative of the jury's verdict and we will continue to work for a favorable disposition of the one remaining claim," said Louis M. Lupin, senior vice president and general counsel for QUALCOMM. "Because intellectual property rights are vitally important to our company, we believe it is essential to challenge meritless intellectual property claims to preserve the value and integrity of legitimate claims."
Zoltar's lawsuit accused QUALCOMM's and SnapTrack's position location technology of infringing three patents when used to determine the location of the caller making an E-911 emergency telephone call using a cellular phone. QUALCOMM's and SnapTrack's patented position location technology supports hundreds of location-based applications and is being widely deployed by numerous wireless carriers around the world.
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, Calif., QUALCOMM is included in the S&P 500 Index and is a 2003 FORTUNE 500(R) company traded on The Nasdaq Stock Market(R) under the ticker symbol QCOM.
QUALCOMM is a registered trademark of QUALCOMM Incorporated. All other trademarks are the property of their respective owners.
For further information, please contact: Corporate Public Relations, Christine Trimble, +1-858-651-3628, publicrelations@qualcomm.com, or Investor Relations, Bill Davidson, +1-858-658-4813, ir@qualcomm.com, both of QUALCOMM Incorporated.
SOURCE QUALCOMM Incorporated
-0- 03/29/2004
/CONTACT: corporate public relations, Christine Trimble, +1-858-651-3628, publicrelations@qualcomm.com, or investor relations, Bill Davidson, +1-858-658-4813, ir@qualcomm.com, both of QUALCOMM Incorporated/
/Web site: http://www.qualcomm.com /
(QCOM)
CO: QUALCOMM Incorporated; SnapTrack Inc.; Zoltar Satellite Alarm Systems ST: California IN: CPR ITE TLS ECP SU: LAW -0- Mar/29/2004 12:31 GMT
Last Updated: March 29, 2004 07:31 EST
http://quote.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=QCOM:US&sid=am3gNR...
Technical Analysis: Is This the Beginning of Another Rally?
NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Thomas Kee for Stock Traders Daily.
SAN FRANCISCO, CA -- (MARKET WIRE) -- 03/29/04 -- Positive news and a host of analyst upgrades and positive comments have Many Traders looking forward to additional Market increases. But are they right?
Are the Markets telling us to buy, sell, or hold at this time?
"Our 3-Tier multiphase Technical Analysis tells us where to buy and sell the Markets and the stocks in our Focus List every day," said Thomas H. Kee Jr., Chief Investment Strategist with Stock Traders Daily. "This allows our subscribers to always know what they should be doing in the Market."
Our Technical Analysis shows us where to buy and sell the NASDAQ, the DOW Jones, and the S&P 500 every day for both Intraday purposes and for longer term trading.
In addition, this same Technical Analysis has been applied to 75 of the most active stocks on the Market so Traders know where to buy and sell these companies as well. A few of these stocks are listed below:
Research In Motion Ltd (NASDAQ: RIMM)
Qualcomm Inc (NASDAQ: QCOM)
OmniVision Technologies Inc (NASDAQ: OVTI)
Symantec Corp (NASDAQ: SYMC)
Details, including the trading ranges for the Markets and the stocks listed above, are available for your review immediately on Stock Traders Daily's Corporate Website:
http://www.stocktradersdaily.com
Thomas Kee, CRD number 2369405.
Stock Traders Daily, CRD number 111906.
Contact: Stock Traders Daily Thomas Kee (415) 561-9598 Provider ID: 04065048
Last Updated: March 29, 2004 09:25 EST
http://quote.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=QCOM:US&sid=aPpvGb...
Qualcomm Is Betting Consumers Will Buy Cell Phone Every Year
March 29, 2004 09:19 EST -- Qualcomm Inc., the world's No. 2 maker of mobile-telephone chips, plans to hire 1,000 workers and increase its research budget to develop chips that will induce U.S. consumers to buy a handset as often as every year
http://quote.bloomberg.com/apps/news?pid=conews&tkr=QCOM:US
SK Telecom Living Testimony to Korea's Mobile Growth
By Kim Tae-gyu
Staff Reporter
SK Telecom, Korea's leading mobile carrier, will announce on Monday its new vision to evolve into a genuine world wireless powerhouse, marking its 20th anniversary and standing tall as a living testimony to Korea¡¯s breathtaking growth in mobile telecommunications.
Newly-elected president Kim Shin-bae, who took the helm in a March 12 shareholders' meeting, is expected to stress nurturing next-generation growth engines to further propel the mobile giant's expansion.
It is the third time SK Telecom declared its vision following ``Move 21'' in 1995, just after the company acquired the Korea Mobile Telecommunications Corp. (KMT) and ``Vision 2010'' in 2000.
The new vision will be about SK Telecom's target of evolving into a genuine colossal in the global mobile market by fostering a flurry of converging services and by aggressively tapping overseas markets.
During the 10 years after privatization, SK Telecom has played the role of global leader in the code division multiple access (CDMA) technology and set the trend in the local mobile telephony market.
As a result, SK Telecom accounts for over 50 percent of the nation's 34 million cell phone subscribers and boasted an upside of 9 trillion won in annual sales as of the end of last year.
From Minnow to Juggernaut
It was on March 29, 1984, exactly 20 years ago today when Korea's first-ever wireless telephony company _ Korea Mobile Telecommunications Services _ came into existence as an affiliate of Korea Telecom Authority (now KT).
The company started with only 32 staff members and a capitalization of 250 million won. In the first year, the start-up recorded just 390 million won in turnover with in-car telephone services.
In 20 years, however, the minnow player has expanded by leaps and bounds to the unarguable top wireless operator in Korea and one of the leading mobile carriers in the world.
Last year, SK Telecom netted 1.94 trillion won in profit on 9.52 trillion won of sales. As of the end of February, the company retained 18.48 million subscribers, carving out 53.41 percent of the total market.
The CDMA technology, offspring of the U.S.-based chip maker Qualcomm, is building blocks in SK Telecom's success story, as the company continued a streak in launching the world's first commercial CDMA services at every level.
After kicking off the CDMA services in 1996, SK Telecom surprised the world twice afterwards by embarking on CDMA2000 1x in 2000 and EV-DO (evolution data optimized) two years later.
The technological edge propelled the company to the rapid growth. From 1 million subscribers in 1995, the customer base has extended ever to 5 million in 1998 and 10 million just a year after. The company seeks to break through a 20-million plateau soon.
To pave the way for the scheme and beyond, SK Telecom has tried to find out new growth momentum especially as the conventional voice-call market shows signs of slowing down of late.
Promising Businesses
On the strength of its core competency in the telecom network, SK Telecom eyes several convergence services like portable Internet, mobile financial offerings and wireless broadcasting.
The company has been pioneering in mobile finance through the Moneta brand, which includes a credit card function and mobile bill services, and launched mobile banking services in a full-fledged manner early this month under business alliance with Woori, Shinhan, Chohung and Hana banks.
As an eventual form of a finance-telecom fusion drive, SK Telecom is looking to upgrade handsets to personal information centers by integrating credit cards and communication cards to Moneta-enabled phones.
SK Telecom has also been at the forefront in landing the pocket multimedia era through the satellite digital multimedia broadcasting (DMB), which allows handset carriers to enjoy broadcasting on the move through their handheld receivers.
The company launched a satellite for the DMB on March 13 and plans to kick-stark the mobility-specific broadcasting from this July through its affiliate TU Media for the first time in the world.
voc200@koeatimes.co.kr
03-28-2004 18:17
http://times.hankooki.com/lpage/tech/200403/kt2004032818160311810.htm
Leading Game Publishers and Developers Endorse QUALCOMM and ATI's New Wireless 3D Gaming Collaboration
QUALCOMM Incorporated, pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology, and ATI Technologies Inc., the global leader for mobile graphics, today announced significant publisher and developer support for their next generation wireless 3D gaming platform, announced earlier this week. Publishers and developers will be able to take advantage of revenue opportunities by creating 3D games for QUALCOMM's BREW solution and ATI's 3D graphics technology to enhance wireless content and bring their games to the next level.
As part of the collaboration announced earlier this week, QUALCOMM's industry-leading Mobile Station Modem (MSM) baseband solutions will be combined with ATI's highly optimized IMAGEON architecture to provide a fully featured, high-performance 3D gaming solution for 3G CDMA2000® and WCDMA devices. QUALCOMM will license the IMAGEON technology for its next-generation MSM7xxx family of chipsets, and will also enable ATI to interface IMAGEON ASICs to QUALCOMM's MSM6xxx chipsets -- providing device manufacturers using QUALCOMM's chipsets with a fully tested 3D multimedia hardware solution.
"The wireless realm represents an opportunity to expand and extend high- quality gaming experiences," said Tim Walsh, president of THQ Wireless. "The future of mobile gaming is in good hands with QUALCOMM and ATI teaming up to provide advanced 3D mobile entertainment solutions."
"Namco America is dedicated to bringing Namco content to the mobile market in North America. We have been extremely successful in developing wireless games with the BREW solution to date and that is one of the reasons why this announcement is so exciting," said Kenji Hisatsune, EVP & COO of Namco America Inc. "With ATI added to the mix and QUALCOMM's advancements on the chipset side, we now have access to some of the top business and technical solutions for wireless game development in a single unified offering. This is an important milestone for game publishers and developers."
"3D is a great advance for mobile content. It dramatically changes the mobile game experience and we commend QUALCOMM and ATI for bringing this solution to market," said Larry Shapiro, EVP of business development and operations, Walt Disney Internet Group.
"By integrating 3D gaming technology at the chipset level and offering the highest level of support to developers via the BREW system, QUALCOMM and ATI are raising the bar on wireless game development to new heights of innovation," said Matt Sivertson, director of international operations, Sony Online Entertainment. "We look forward to taking full advantage of this new technology to raise the standard of our mobile games, close to that of our popular console and PC games."
"The advent of accelerated graphics hardware in portable devices marks the beginning of a truly exciting time for gaming and graphical applications," said Peter Freese, core technology director, NCsoft. "It dramatically expands the market for graphical entertainment, personal and business applications."
"Sega was an early adopter of wireless gaming and has seen it become a great business," said Yuki Kobayashi, director of mobile, Sega of America. "We are pleased to see ATI bringing 3D graphic technology to this market as it will allow the market to mature on a worldwide basis."
"Leveraging 3D graphics has been a central pillar of Bandai's wireless gaming strategy to date, and this announcement allows us to continue on this path to create increasingly rich mobile games," said Masao Ohata, vice president of Network Entertainment for Bandai America Incorporated. "The combination of QUALCOMM's MSM chipsets, ATI's leading-edge graphics acceleration technology and the BREW system promises an exciting future for mobile gaming and entertainment."
"The announcement of ATI and QUALCOMM working together to advance 3D gaming technology at the hardware level is a very key event in the wireless gaming industry," said John Greiner, president, Hudson Entertainment. "This will rapidly accelerate the proliferation of 3D graphics and we're looking forward to evolving both our existing BREW titles to 3D as well as produce all new content."
"This is a significant announcement from a business and technology standpoint, as it will enable us to leverage our premium entertainment brands in an entirely new level of visual clarity across our wireless games portfolio," said Rio Caraeff, vice president of wireless services for Sony Pictures Digital Networks. "The BREW platform has been a very successful business for us, and this exciting announcement will enable this trend to continue with the development of higher quality 3D titles for consumers to enjoy."
"3D is one of the next frontiers for wireless game development and we are pleased that ATI's 3D technology is coming to QUALCOMM's BREW solution," said Mitch Lasky, CEO of global wireless publisher JAMDAT Mobile Inc.
"ATI's IMAGEON solution brings mobile gaming to a level at which the product of mainstream game development can be brought to the wireless consumer," said Lincoln Wallen, vice president of RenderWare Mobile for leading middleware supplier Criterion Software. "This collaboration between ATI and QUALCOMM will serve to excite the CDMA market and stimulate the demand for premium game content."
QUALCOMM's BREW system provides products and services that connect the mobile marketplace value chain, which includes application developers, publishers, content providers, device manufacturers, operators and consumers.
Publishers and developers worldwide are generating revenue from BREW-based applications and content, and 24 manufacturers have offered more than 120 BREW-enabled device models to consumers. BREW is successfully enabling the commercial wireless data services of many very successful operators, including Verizon Wireless, ALLTEL, Cellular One, MetroPCS, Midwest Wireless and U.S. Cellular in the United States, China Unicom, KDDI in Japan, KTF in South Korea, Hutch in Thailand, Telstra in Australia, VIVO in Brazil, BellSouth Chile, BellSouth Colombia, BellSouth Ecuador, BellSouth Guatemala, BellSouth Panama, BellSouth Peru, Telefonica Moviles in Peru, Movicom in Argentina, Telcel and Movilnet in Venezuela, Verizon Dominican Republic, Verizon Wireless Puerto Rico and Pelephone in Israel.
http://www.gameinfowire.com/news.asp?nid=4171
Can you hear me now: Immigrant paved the way for digital revolution
By Tom Tugend
LOS ANGELES, March 28 (JTA) — As millions of people across the globe chat away on their cell phones, they can thank an Italian Jewish immigrant.
Equally grateful is the University of Southern California, which earlier this month unveiled its newly named Andrew and Erna Viterbi School of Engineering, in recognition of a $52 million gift.
With banners, balloons, bands, laudatory speeches and even a canon shot salvo, USC feted Andrew Viterbi, who in a later interview traced his career as a wireless communications pioneer, academician and entrepreneur, and weighed the responsibilities of a Jewish philanthropist.
Viterbi, 68, was born in Bergamo, a northern Italian town of 100,000 with 70 resident Jews, the son of a prominent ophthalmologist. The year was 1935. It was soon a frightening time for the well-established Jewish community of Italy as fascist dictator Benito Mussolini began to ape Hitler’s anti-Semitic laws.
“By 1938, my father had lost his hospital position, couldn’t practice his profession, Jewish kids couldn’t attend public schools and we were shunned,” recalled Viterbi.
Fortunately, his father obtained a visa to enter the United States and the 4-year-old with his parents landed in New York on Aug. 27, 1939 — five days before the outbreak of World War II.
The family soon moved to Boston, where young Andy could look across the Charles River and glimpse the Massachusetts Institute of Technology, and he decided then and there on his future college and career.
For his bar mitzvah, Andy and his parents traveled back to Italy, where one of the celebrants was the great writer Primo Levi, a distant relative.
After finishing MIT, Viterbi began the West Coast phase of his life by joining the Jet Propulsion Laboratory in Pasadena. He met and married Erna Finci, who had arrived with her family as refugees from Sarajevo, and they soon added three children to the household.
Viterbi received his doctorate in electrical engineering from USC in 1962, in 1963 joined the UCLA faculty, and three years later developed his path-breaking Viterbi Algorithm.
It happened while the family was celebrating Purim, recalled Erna Viterbi, and the kids were anxious to show off their homemade, prize-winning costumes. Despite the efforts of the children and their mother, the father couldn’t be distracted from scribbling on a piece of paper.
Finally, Erna Viterbi asked her husband if he had come up with anything, and he replied, “Well, I thought about it, but it’s nothing major.”
Actually, it was the Viterbi Algorithm, now imprinted on USC T-shirts, which opened the doors to the digital age as a groundbreaking mathematical formula for eliminating signal interference. This allows cell phones to communicate without interfering with each other, but this and later contributions by Viterbi go much further.
The dean of the USC engineering school, C.L. Max Nikias, summed up Viterbi’s impact, saying, “Try to imagine a world without Andy’s inventions, and you’d have to travel back in time 30 years — before cell phones, direct broadcast satellite TV, deep space weather forecasting and video transmission from the surface of Mars.”
As an entrepreneur, Viterbi co-founded Linkabit in the 1960s, and cell phone giant Qualcomm in San Diego in 1985. The companies have been huge success stories and in the year 2000, Viterbi ranked 386th on the Forbes list of the 400 richest Americans, with an estimated worth of $640 million.
Currently, he and his daughter Audrey head the Viterbi Group, a small investing and advisory firm for start-up companies. He has also stepped up his long involvement in Jewish and general civic and philanthropic causes.
A former president of the Jewish Community Foundation of San Diego, Viterbi is proud as well to have served as president of Congregation Beth El in La Jolla, and even prouder that his son Alan holds the same post today and keeps a kosher home.
Unlike most very wealthy American Jews, who, according to a recent study, channel only a minute fraction of their charitable giving to specifically Jewish causes, Viterbi has played a major role in aiding Jewish institutions in the San Diego area and in Israel.
Until his mega-gift to USC, he estimated, he assigned 60 percent of his total giving to Jewish causes and 40 percent to general ones.
The former include the San Diego Jewish Academy, attended by his five grandchildren, the Jewish Community Building, named in honor of his wife’s parents, as well as the Technion — Israel Institute of Technology in Haifa and various start-up companies in Israel.
But he makes no apologies for his generosity to USC and other non-Jewish beneficiaries, including MIT and UCLA.
“One naturally forms attachments to universities and institutions one grew up with,” he said. “We are Jews, but we also live in a larger world and society.”
http://www.jta.org/page_view_story.asp?intarticleid=13922&intcategoryid=5
Qualcomm may favor China in contract
SEOUL, South Korea, March 27 (UPI) -- Qualcomm Inc.'s royalty policy has angered some Korean telephone manufacturers who believe the U.S. chipmaker favors China over Korea.
Korean cell phone producers that make code division multiple access phones pay a fixed 5.75 percent royalty for export and 5.25 percent for local sales to the San Diego-headquartered Qualcomm.
However, the Korea Times reported exclusively Saturday that a firm in China said Qualcomm's royalty 2.65 percent for local sales and 7 percent for offshore shipments.
The 10-year China contract also reportedly says export royalties will be cut to 5 percent after three years, "if more than 100,000 such subscriber units (handsets) are sold in the applicable calendar (year) in overseas markets.
While the contract applied to one Chinese manufacturer, Hwang Tae-kyung, of the trade group, Information and Telecommunications Intellectual Property Association, said the same terms would apply to others.
"Because Qualcomm has a policy of setting the same royalty rates for firms of the same country, the royalty level will be identical for all Chinese companies, said Hwang. "I have a copy of a contract between Qualcomm and another Chinese company, which stipulates the same rates."
http://www.washtimes.com/upi-breaking/20040327-082122-8663r.htm
Verizon hooks up Wi-Fi alternative
Two years ago in this column, tech rapper Eddie B came up with an alternative to a verse in a Verizon Wireless marketing brochure. The Verizon promo, for a new wireless network that connected laptop users to the Internet and their corporate e-mail, went: "Constantly on the go? Don't settle for slow."
My alter-ego's revisionist rhyme: "Makes dial-up modem at times seem fast. Connections that sadly do not always last."
I am not resurrecting Eddie B's short-lived career. And I subsequently had a better experience with the Verizon "1xRTT" network, as it is known in telecom jargon.
Now, Verizon is spending $1 billion building out a zippier backward-compatible nationwide network based on the same Qualcomm CDMA technology that is the core of 1xRTT. The network promises data speeds roughly comparable to what you'd get with a cable modem or DSL.
It may turn out to be a viable broadband wireless alternative to Wi-Fi for business travelers and consumers.
It, too, has a geeky moniker, Evolution-Data Optimized, or EV-DO for short. But Verizon is wisely marketing it as BroadbandAccess. (Its slower 1xRTT cousin is now called NationalAccess.)
The company initially deployed the service in two markets last fall: Washington, D.C., with partner Lucent Technologies, and San Diego, with Nortel Networks. Though mum on specifics, Verizon says the service will start to become available in other major metropolitan areas this summer. About 75 million customers, or a third of Verizon's network, will be BroadbandAccess-ready by year's end. Verizon plans to phase in additional markets in 2005.
As with the pokier 1xRTT network, EV-DO is primarily targeted at business people who want to access e-mail and corporate intranets, download files and prowl the Web on laptops from practically anywhere, anytime. A speedier network ultimately also will be a boon for consumers who want to send or receive video or compete in multiplayer games.
I tried BroadbandAccess this week in downtown Atlanta. Verizon constructed a temporary network as part of promotional efforts during the CTIA Wireless 2004 industry conference, a showcase for the latest fancy phones and other mobile devices.
The EV-DO technology will be incorporated into cellular handsets and PDAs. LG Electronics showed off an EV-DO-capable phone called the LG8000 to be launched with an "unnamed" carrier later in the year. It's hardly a secret that Verizon will be that carrier. Samsung also has capable phones.
For now, however, Verizon is flaunting the EV-DO technology in laptops. Here's how it works. You install software, then insert a Sierra Wireless PC card into a slot on your computer. The credit-card-size thingamajig protruded about an inch outside the side of my computer; the card also has a foldable 11/2-inch tall antenna.
A small window then appears on the computer screen. You must click on a connect button inside that window and wait to complete the process, less than 20 seconds in my experience.
Verizon promises broadband-type download speeds of 300 to 500 kilobits per second, with peaks of up to 2.4 megabits per second. By contrast, 1xRTT downloads at about 40 to 60 kbps, putting it in the ballpark of a dial-up modem. Verizon says customers may get occasional bursts of up to 144 kbps.
EV-DO performed as advertised during my Atlanta tests with an IBM ThinkPad running Windows 2000. Granted, the makeshift network "footprint" was relatively small, and I can't imagine there were nearly enough users to stretch its limits.
I checked out BroadbandAccess at the convention center where CTIA was taking place, in my hotel room (and lobby), at another hotel blocks away and in a moving taxi. I never dropped the connection.
BroadbandAccess users who move out of coverage areas in San Diego and D.C. can continue surfing, albeit at slower 1xRTT speeds. The card I was using was not set up to do that.
When Verizon extends coverage, it will have to lower prices to entice consumers. Service costs $80 a month, the card $150 (following a $100 rebate with a two-year service agreement).
You may be wondering why you would go with EV-DO at all, when Wi-Fi, which potentially operates at faster broadband speeds, is making its mark in so many public locales? One answer: You won't have to search for "hot spots."
AT A GLANCE
Verizon Wireless BroadbandAccess
Pro: Seems to attract a playful and smart crowd.
Con: Expensive. Only deployed at the moment in metropolitan San Diego and Washington.
From Verizon, www.verizonwireless.com.
$80 / month, $150 (after rebate and two-year commitment) for PC card.
Verizon chief technical officer Dick Lynch, who admittedly has a vested interest in the success of EV-DO, says he sometimes refers to Wi-Fi hot spots as warm spots and cold spots. Indeed, because Wi-Fi relies on proximity to a base station, the technology may not be the most practical when you are out and about, especially in a moving vehicle. That said, Wi-Fi is starting to show up in pretty out-of-the-way places, including airplanes and trains, and efforts are underway to extend its range.
By contrast, EV-DO is billed as a ubiquitous wide area network that should eventually work most places where you have cell coverage. At one point in the convention center, I was able to connect to BroadbandAccess when I could not glom on to a Wi-Fi network.
EV-DO does have shortcomings, aside from the obvious immediate limitations in coverage. Though it's not a big deal using a laptop, this is a data-only network that cannot handle voice.
Rival Sprint is banking on a speedy network alternative called 1xEV-DV, which does allow voice and data to co-exist. But we're likely looking at a year or two before service becomes commercially available. (Other carriers are testing other wireless broadband solutions.) At CTIA, Samsung did demonstrate a live real-time video-conferencing application on phones using EV-DV.
I'll make a final judgment on Broadband-Access when Verizon finally makes it available in the New York metro area where I work and live.
In the meantime, my only bugaboo was relatively minor. You must follow a strict procedure when you log out of the network and pull out the card, lest you have to reboot to reconnect. It was about the only thing that felt slow.
Ed Baig's Personal Tech column appears every Thursday in USA TODAY and on USATODAY.com. E-mail: ebaig@usatoday.com
http://www.usatoday.com/tech/columnist/edwardbaig/2004-03-24-baig_x.htm
Wireless data dominates CTIA show
New phones and networks are offered
By Scott Tyler Shafer March 26, 2004
It may not happen overnight, but the foundation for an empowered and connected mobile workforce is being laid.
At the Cellular Telecommunications & Internet Association (CTIA) trade show last week, attention centered on handsets and the extension of high-speed cellular networks that deliver data. These two distinct movements are expected to have a significant impact on the enterprise.
Verizon Wireless announced it would extend its high-speed data network nationwide, thereby giving consumers and road warriors data rates between 300Kbps and 500Kbps. The service, BroadbandAccess, will be introduced later this year and will reach phones, PDAs, and notebook computers equipped with PC modem cards. BroadbandAccess uses a next-generation CDMA (Code Division Multiple Access) technology called EV-DO (Evolution-Data Only), which, as the name implies, delivers data only.
According to Richard Lynch, executive vice president and CTO of Verizon Wireless, enterprises are clamoring for this kind of service so that they can make their existing applications available to employees on the move.
"They're breaking my door down," Lynch added.
Pete Thompson, director of marketing at T-Mobile's HotSpot division, agreed that the enterprise is an important market for wireless technology. Because of this, the company is targeting T-Mobile HotSpot -- which provides high-speed, Wi-Fi Internet access -- at consultants, journalists, real estate agents, and insurance salespeople.
"We have a robust Wi-Fi solution that extends the office with great security," Thompson said. "We're focused on the enterprise road warrior."
T-Mobile offers wireless access via Wi-Fi technology at 4,000 U.S. locations, mostly Starbucks coffeehouses, Borders Books & Music stores, and Kinko's. The company, however, is not finished. Thompson said that by the end of the year T-Mobile will have 10,000 hot-spot locations in the United States and Europe combined.
T-Mobile will augment its Wi-Fi service with its cellular network, which uses GSM (Global System for Mobile Communications) technology to reach users after they have left a hot spot. But the demand for that capability remains low, Thompson said, pointing to the climbing average session time users connect at Wi-Fi locations to illustrate that notebook computers -- and not handsets -- are what employees are using to access data and applications.
Undeterred, handset makers continue to add robust functionality to phones and PDAs in anticipation of these devices being used to access data from an enterprise or for entertainment.
At the show, Motorola introduced two new phones clearly designed to eat up data. The A845, a UMTS/WCDMA (Universal Mobile Telecommunications Service/Wideband CDMA) phone includes two-way video calling, GPS (Global Positioning System) location capability, MP3 audio downloading, and other features.
The second phone, the A840, combines GSM and CDMA technology in a single phone to allow travelers to use the phone in North America, Europe, and other regions while retaining the same number.
http://www.infoworld.com/article/04/03/26/13NNctia_1.html
New callers from the east
Thomas K Thomas / March 27, 2004
In the 16th century the British, French, Portuguese and Spanish came sailing to India in search of spices, textiles and the fabulous wealth of the Indies. Today, there's a new gold rush.
This time the new adventurers are Chinese, Koreans, Taiwanese and Singaporean companies coming to stake their claim to the golden opportunities offered by the Indian telecom sector.
At stake are billions of dollars. For a start, there's the 2 million handset per month market currently controlled by deeply entrenched European and American technology companies like Nokia, Motorola and Ericsson.
India is also placing mouth-wateringly large orders for telecom equipment and every company in the world is watching the action closely.
Six new handset manufacturers have launched in India in the last six months
BenQ, offers a GPRS phone for Rs 5,000 compared to the cheapest Nokia GPRS which is at Rs 8,000
ZTE and Huawei are bidding for BSNL's giant Rs 6,000 crore tender
Take a look at what's happening. In the last six months at least six new handset manufacturers have launched in India. These include China's largest homegrown handset manufacturer Nungbo Bird, Taiwanese DBTel and the $3.5-billion BenQ.
There are others waiting in the wings. Judging by the upbeat mood and the turnout at the recently held Convergence India 2004, other lesser-known brands like the Korean manufacturer Ezze Mobile and Amoi Electronics from China are planning to take on the Nokias and the Motorolas in the Indian market.
These newcomers have already demonstrated their intent by flooding the market with around 30 new handset models in recent months.
A host of names from the east are looking hungrily at India. Companies like Korea Telecom and Singapore Technologies are looking for ways to tap the booming wireless and broadband market in India.
Korea Telecom has signed an MOU with BSNL to offer broadband services. Similarly, Singapore Technologies are talking to Indian cellular operators for joint ventures.
On the network equipment side, it's the Chinese who have made elaborate plans to dent the hold of the European and Americans. The $1.4-billion ZTE Corporation and Huawei Technologies have already entered into joint ventures with Indian companies ITI and HFCL, respectively.
But can these new entrants take on the might of the telecom Goliaths? Nokia, the market leader, recently reported a revenue of Euro 1 billion in 2003 from India alone. That means India is Nokia's sixth largest market in the world and the Finnish company isn't about to let others get a foothold without a fight.
But the newcomers are also confident they can push their case in a new market. ZTE's vice president for international markets Fang Rong believes that her company's experience in China will help it in India.
Says Rong: "The Indian story is similar to that in China. When we entered the Chinese market, it was dominated by the same European and American manufacturers. But look how we have taken the leadership position in the last few years."
ZTE has earmarked $50 million this year to set up a manufacturing unit in India for network equipment. It is also evaluating whether to manufacture handsets here. Industry watchers point out that the Chinese companies can't be underestimated and that the last three CDMA tenders from MTNL and BSNL have gone to ZTE and Huawei.
While ZTE was the lowest bidder for BSNL's $50 million tender, Huawei got the $70 million project for putting up 750,000 CDMA lines. ZTE also grabbed the tender to supply 50,000 CDMA handsets.
The two have now separately pitched in to take on Motorola, Siemens, Nortel, Alcatel for the world's largest tender -- worth around Rs 6,000 crore (Rs 60 billion) -- floated by BSNL to install about 12 million GSM lines.
If either of the Chinese companies bag the project, it will catapult them overnight to a 35 per cent market share in the Indian telecom equipment market. The total mobile market is at around 30 million lines.
A look at the estimates for the Indian telecom market explains why all these companies are making a beeline to India.
"In this scenario most mobile companies will be forced to invest heavily on their networks to upgrade from the current capacity level of 30 million subscribers," says Pankaj Mahindroo, president, Indian Cellular Association.
Adds Sanjay Mehta, director, Ernst & Young: "India is at the inflection point of a different growth trajectory. It is poised to have the largest telecom network after China in the next five to seven years."
In this situation it's hardly surprising that everyone is rushing to India. The new players in the handset market are starting by offering feature rich phones at cheaper prices.
BenQ, the fourth largest mobile handset manufacturer worldwide and the largest in Taiwan, for instance, offers a GPRS enabled phone for Rs 5,000 compared to the cheapest Nokia GPRS phone, which is above Rs 8,000.
Says Ashish Bakshi, Country Head, India Operations, BenQ: "Even our entry level phones sport features such as a phone book memory of 500 records, availability of polyphonic tunes, GPRS and WAP."
The company is also making other moves to ensure that it out maneuvers the industry's top dogs. It is going into smaller cities and is launching seven new models this year. It is also bringing in the latest technology.
The BenQ S670C has a 3D face morphing technology, which allows users to edit pictures on the handset. By end of 2004, the company has set itself the target of grabbing 5 per cent of the handset market in India.
Similarly, Taiwanese company DbTel, which entered the market in November 2003, has launched 12 models in the Indian market and plans have 23 on sale by year-end.
Company executives say the company sold 4.5 million units worldwide in 2002 and expects to sell about 6 million this year riding on the boom in Asia. In India, DbTel is ambitiously targeting 25 per cent of the new sales business by year-end.
Then, there's Bird, which says it has catapulted past Motorola and Nokia to become China's top vendor of mobile phones in 2003. It is expecting to repeat this performance in India.
However, the market leaders remain unfazed by the ambitious newcomers. "I don't think the new players have made any dent in the Indian telecom market. There's more to gaining market share than just launching new products. You have to provide after sales support, there has to be brand awareness. We have competed with them in their home turf. So there is no threat," says Motorola's Narendra Nayak.
Nokia executives argue that the Chinese won't be as formidable here as they were on home ground. "The Chinese and Taiwanese story is different from that in India. There they had the advantage of being local brands, had the advantage of offering products in the local language and they were also backed by a government which pushed local brands," said a Nokia executive.
Agrees V K Munoth from Munoth Communications, which is the distributor for DbTel handsets in India. "In a market like India getting handset sales of 15,000 a month is no big deal. Whether these companies can get sales of over 20,000 is the litmus test. The initial numbers seems to be going slow for these companies as they need to convince the consumers that the product is good,"
And that's precisely what some of them are attempting to do. They are spending heavily to build a brand image. BenQ for instance, is pumping in around Rs 15 crore (Rs 150 million) in brand promotions this year. The company has also tied up with VJ Cyrus Broacha who will exclusively promote IT & telecom products from BenQ.
Are the established players taking the challenge lying down? Not likely. One sure sign that these companies are taking the Indian market seriously is that top global executives are flying here regularly.
Be it Jorma Ollila, global chief of Nokia, Neil Ramsom, chief technology officer, Alcatel or Mike Zafrovski, COO, Motorola, they have all been here in the last few months. They aren't losing any sleep yet but they also aren't ignoring the new challengers from the east.
http://www.rediff.com/money/2004/mar/27spec2.htm
Ethiopia getting a CDMA network
China's Huawei Technologies has signed a contract valued at over US$10 million with Ethiopian Telecommunications Corporation (ETC), the sole operator in Ethiopia, as the strategic partner to construct its CDMA2000 1X WLL network.
Under the contract, Huawei will provide ETC with the complete CDMA 1X WLL system, comprising a combination of 800MHz and 450MHz, which is based on the CDMA2000 1X technologies. This system will supplement the operator's existing PSTN network via V5.2 interface. Besides the current PSTN service, the CDMA2000 WLL will also provide high speed data service to boost the network value of ETC. Based on Huawei's advanced 3G platform, this system can be smoothly evolved to 1xEV-DO, guaranteeing the future growth of ETC's business.
In this project, Huawei's 800MHz CDMA WLL system will be deployed in Addis Ababa, the Capital of Ethiopia; and the 450MHz CDMA WLL system in other three famous industrial cities. This WLL system can quickly access the subscribers and it is the cost effective way to quickly promote the tele-density in Ethiopia.
CDMA WLL saves the investment on cabling, which consists of quite a proportion of the operator's CAPEX. It also provides many attractive features that conventional wire-line access could not compete with, such as fast provisioning of services, flexible coverage, and high security.
"With the help of the CDMA2000 wireless access technology, many traditional PSTN operators accelerate their expansion of business," said Tao jingwen, President in charge of Huawei Southern Africa Operation. "As a leading vendor and reliable partner in the telecom industry, Huawei is always providing the most competitive solutions for our customers and spares no efforts in helping them win in the market," he added.
http://www.cellular-news.com/story/10916.shtml
Czech Republic getting a 1xEV-DO network
The Czech Republic's Eurotel Praha has selected Nortel Networks as the sole supplier of what is expected to be the industry's first CDMA2000 1xEV-DO network operating in the 450MHz radio spectrum. The network, which is already being deployed across the Czech Republic, will help position Eurotel to introduce broadband Internet and other advanced services to wireless subscribers. Nortel Networks CDMA 450 architecture will also help position Eurotel to drive reduced capital and operating costs, and to maximize its existing investments in 450 MHz spectrum and legacy network equipment.
Network deployment is expected to be complete in the second quarter of 2004, with commercial services for Internet browsing, e-mail and rich multimedia access planned for May 2004. Nortel Networks will also provide services including engineering, installation, maintenance and optimization.
CDMA 450 is a standard for use in countries transitioning to digital wireless service from Nordic Mobile Telephone (NMT) 450 analogue service, and in countries advocating universal access for voice and data. Because of the lower radio spectrum, CDMA 450 has the advantage of covering a significantly larger geographical footprint compared to traditional cellular systems.
"Leveraging our eight-year history in CDMA, we have developed an innovative CDMA 450 product that is unbeatable in terms of driving down capital and operating costs for operators," said Steve Searles, vice president, marketing, CDMA/TDMA, Nortel Networks. "This gives Nortel Networks a unique advantage in helping wireless leaders like Eurotel deploy the most effective architecture for bringing next generation wireless data services to market."
http://www.cellular-news.com/story/10923.shtml
UTStarcom Expands CDMA Portfolio
Friday, March 26, 2004
UTStarcom will acquire the CDMA intellectual-property portfolio of Hyundai Syscomm at a price band of $12-15 million. UTStarcom will get the product portfolio, the entire intellectual property, and selected R&D assets and employees. Hyundai Syscomm may however use these acquired intellectual property in its own business. Meanwhile, UTStarcom has also signed a worldwide royalty-bearing agreement with Qualcomm. This would allow UTStarcom to develop, manufacture, and sell subscriber and infrastructure equipment for use in CDMA2000, WCDMA (UMTS), and TD-SCDMA systems.
http://www.voicendata.com/content/vndtoday/104032601.asp
Qualcomm "buy," target price raised
Friday, March 26, 2004 5:15:17 AM ET
Deutsche Securities
NEW YORK, March 26 (New Ratings) – In a research note published yesterday, analysts at Deutsche Bank Securities reiterate their "buy" rating on Qualcomm Incorporated (QCOM). The target price has been raised from $70 to $80.
© 2004 New Ratings
Qualcomm Inc / all articles previous
03/25/04 Qualcomm "outperform" RBC Capital Markets
03/18/04 Qualcomm "hold," estimates raised Wedbush Morgan
03/05/04 Qualcomm upgraded to "buy" Deutsche Securities
http://www.newratings.com/analyst_news/article_401334.html
Qualcomm is #17 of The 2004 BusinessWeek 50
American Consumer Plays Key Role in 8th Annual BusinessWeek 50 Ranking of Top Performing U.S. Companies
Nearly half the companies on this year's list were buoyed by continued
consumer demand. They include: Best Buy, eBay, Home Depot, Lowe's, MBNA, Nike,
PepsiCo, and Starbucks, among others.
Insurer Progressive Corp. Tops the List
NEW YORK, March 25 /PRNewswire/ -- Progressive Corp., with strong revenue
gains and a robust 152% increase in its stock price since 2001, has catapulted
itself to the top spot in the 2004 BusinessWeek 50. The Mayfield Village
(Ohio)-based insurer first turned heads in the 1990s by giving prospective
customers price quotes from up to three rival insurers, as well as its own
-- a provocative move that won thousands of new accounts. Since then, the
company has never stopped trying to find ways to do things better, faster, and
cheaper for its 12 million customers, writes BusinessWeek in the April 5th
issue (on newsstands Monday, March 29).
Progressive epitomizes the spirit found among the companies in the
magazine's eighth annual rankings of the best-performing members of the
Standard & Poor's 500-stock index. Rounding out the top five this year are
Cendant (No. 2), WellPoint Health Networks (No. 3), UnitedHealth Group (No. 4)
and Forest Laboratories (No. 5).
Unlike other lists, the BusinessWeek 50 is not an exercise in tracking
which companies are the biggest or have the hottest stocks. Rather, the BW50
was designed to distinguish large companies that can go the distance with
strong operating and market performances. To determine the winners,
BusinessWeek runs a proprietary screen that's designed to measure growth in
revenues, profits, and returns to shareholders, over both one-and three-year
periods.
The BusinessWeek 50 list is dominated by companies that were
well-positioned to profit from the economic recovery -- health-care outfits,
homebuilders, and resurgent technology companies, as well as retailers that
have benefited from the resilience of the American consumer. But scratch
beneath the surface and the common denominator for many of this year's stars
is a deeper understanding than their rivals of what makes their customers
tick.
A prominent feature of this year's list is the importance of catering to
customers. The BW50 includes three homebuilders, and eight retailers -- the
most merchants in BW50's history. At a time when many corporate managers
complain that they have no pricing power -- a symptom of weak brands -- this
year's BW50 also includes a number of power brands like eBay (No.13),
Starbucks (No.25), and Harley-Davidson (No.43) that aren't so much selling
products as lifestyle choices for consumers worldwide.
The Class of '04 ranges from companies like Lowe's Cos. (No.9), which
sensed the importance of marketing its home-improvement wares to the women who
actually make the majority of home renovation decisions, to Dell (No.16),
which has built a cult following among corporate information-technology
managers for its low prices, certainly, but also for providing customers with
the data to better understand their own purchasing and usage patterns.
Surprisingly, nine health-care and drug companies made the cut this year
-- a relatively impressive showing, albeit a sharp drop from the 16 on last
year's list. The culprit: a decline among pharmaceutical makers, who have
suffered from patent expirations and a dearth of blockbuster drugs. Indeed,
with Merck's plunge from No.20 last year to No.270 this year, the last
surviving company to make the BW50 every year since inception has been
dethroned.
If there's one constant in the BusinessWeek 50 over the years, it has been
the amount of turnover. In part, that reflects recent roller-coaster-like
swings in sectors like energy, technology, telecom, and retailing.
Altogether, only 20 companies from the Class of '03 are making a repeat
appearance on the 2004 roster. Of the 30 newcomers, two of this year's best
performers, Symantec Corp. (No.15) and Express Scripts Inc. (No.42), were just
added to the S&P 500 during the past year.
Reflecting the resurgence of Silicon Valley, six technology companies made
the list, versus three last year. That's still a far cry from 1997, when our
inaugural ranking was dominated by 12 tech companies, including the top four:
Intel (which rejoins the list this year after a three-year absence),
Microsoft, Dell, and Cisco Systems.
Beginning March 25th, BusinessWeek Online (http://www.businessweek.com/bw50/)
will provide continuing coverage of the BusinessWeek 50 throughout the year,
starting with Street Wise investing columns on a number of the most prominent
BW50 companies. The site will also feature the BW50 interactive scoreboard
-- with daily, monthly and quarterly updates -- plus a special stock screener
for ranking companies based on the magazine's BW50 criteria, as well as
additional features.
The 2004 BusinessWeek 50 are:
Rank Company Name Ticker Rank Company Name Ticker
1 Progressive PGR 26 Procter & Gamble PG
2 Cendant CD 27 Yahoo YHOO
3 WellPoint Health Networks WLP 28 Apache APA
4 UnitedHealth Group UNH 29 Sears Roebuck SRJ
5 Forest Laboratories FRX 30 Stryker SYK
6 ACE ACE 31 Sysco SYY
7 Best Buy BBY 32 Dollar General DG
8 ConocoPhillips COP 33 Bed Bath & Beyond BBBY
9 Lowe's LOW 34 Quest Diagnostics DGX
10 Electronic Arts ERTS 35 Nike NKE
11 Pulte Homes PHM 36 Devon Energy DVN
12 Centex CTX 37 Intel INTC
13 eBay EBAY 38 Johnson Controls JCI
14 Chevron Texaco CVX 39 Staples SPLS
15 Symantec SYMC 40 American International
Group AIG
16 Dell DELL 41 Ambac Financial Group ABK
17 Qualcomm QCOM 42 Express Scripts ESRX
18 International Game
Technology IGT 43 Harley-Davidson HDI
19 MBNA KRB 44 PepsiCo PEP
20 Marathon Oil MRO 45 Burlington Resources BR
21 St. Jude Medical STJ 46 Carnival CCL
22 Home Depot HD 47 3M MMM
23 Exxon Mobil XOM 48 Apollo Group APOL
24 Johnson & Johnson JNJ 49 KB Home KBH
25 Starbucks SBUX 50 Humana HUM
About the BusinessWeek 50:
Since the BW50's inception seven years ago, BusinessWeek has set out to
rank Corporate America's best performers, by capturing both momentum and
sustainability. To determine how the companies in the S&P 500 index stack up
against one another, BusinessWeek ranks all 500 companies using eight key
criteria of financial success. Sales growth, profits, and return to
share-holders are all part of the criteria.
To reward consistency, performance is measured over both
one-and-three-year time periods. To get a better fix on which companies
squeeze the most out of operations, the magazine analyzes profit margins and
return on equity. Using those rankings, grades are then assigned for each
measure. The top 20% received an A, the next 20% got a B, and so on, down to
the F's in the bottom quintile. BusinessWeek then combines the individual
rankings and adds a weighting for sales volume and long-term debt-to-capital
ratio to come up with an overall ranking.
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/03-25-2004/0002135243&...