Qualcomm Inc (QCOM)

[khemara_qc]

Qualcomm's Jacobs Says TV on Handsets to Be `Big' (Update2)

By Peter J. Brennan and Fred Fishkin

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=QCOM:US&sid=anOw6HCq...

Jan. 8 (Bloomberg) -- Qualcomm Inc., the world's second- biggest maker of chips that run cellular phones, predicted television on handsets will be ``big business.''

``Once you see mobile TV on a handset, you realize it's very compelling,'' said Chief Executive Officer Paul Jacobs said today in an interview at the Consumer Electronics Show in Las Vegas. ``It looks like it's going to take off.''

Verizon Wireless, the second-biggest U.S. mobile phone carrier, said yesterday it would use Qualcomm's MediaFLO service to broadcast shows from the CBS, NBC and Fox TV networks to mobile phones. If Qualcomm can sign an agreement with another large carrier, MediaFLO could reach as much as half of the U.S.

Qualcomm will generate revenue by making and licensing chipsets and broadcasting the shows, American Technology Research analyst Albert Lin said in a Jan. 4 note to investors.

``The high margin and high leverage aspects of the MediaFLO revenue opportunity will likely create a premium'' on Qualcomm share price, Lin said in his note. ``Existing services in the marketplace will begin to immediately suffer churn and/or revenue deceleration as their services may have to be discounted by over 50 percent to retain subscriber interest.''

Verizon is the first U.S. wireless carrier to sign on to MediaFLO. AT&T Inc.'s Cingular Wireless, the largest U.S. carrier, and third place Sprint Nextel Corp. offer video streamed over their own networks.

Streamed Video

Streamed video using regular data networks provides up to 15 frames a second. MediaFLO promises 25 to 30 frames a second and channel-switching times of less than two seconds, which Qualcomm said is similar to regular TV.

Shares of San Diego-based Qualcomm fell 43 cents to $38.26 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They dropped 12 percent last year. Texas Instruments Inc. is the largest maker of chips for handsets.

Qualcomm is spending $800 million to develop MediaFLO. The company has held talks with Cingular Wireless, Sprint and T- Mobile USA Inc., Sanjay Jha, president of Qualcomm's CDMA Technologies Group, said at a conference on Dec. 7.

``There will be another carrier besides Verizon,'' Gina Lombardi, president of Qualcomm's MediaFLO USA, said in an interview on Dec. 14.

MediaFLO will operate like a cable company, providing news, sports, cartoons and prime-time shows, Lombardi said.

Bedminster, New Jersey-based Verizon Wireless, which is owned by New York-based Verizon Communications Inc. and Newbury, England-based Vodafone Group Plc, plans to introduce MediaFLO this quarter.

Crown Castle International Corp., the second-biggest owner of U.S. wireless phone towers, said today it is testing broadcasting TV to mobile phones in New York City using a competing technology called DVB-H that Texas Instruments is promoting.

To contact the reporters on this story: Peter J. Brennan in Los Angeles at [e-mail] ; Fred Fishkin in Las Vegas at [e-mail] .

Last Updated: January 8, 2007 16:41 EST