Dow Jones Newswires -- July 8, 1999
DJ Mobilcom's Shr Up 3.7% On Announcement Of Pact With Cisco
FRANKFURT (Dow Jones)--German telecommunications company MobilCom AG (G.MBC) said Thursday that it has agreed to close technological cooperation with Cisco Systems Inc. (CSCO) of the U.S.
Traders say that the news has caused the Frankfurt-listed company's shares to rise sharply. At 0835 GMT, MobilCom shares were outpacing the Xetra DAX index. They were up EUR3.20, or 3.7%, to EUR90.50, while the DAX index was up 0.4%.
MobilCom said it will offer Internet telephone services on its own network within "a few months." MobilCom users will be able to make phone calls via the Internet, which is much cheaper, when calling long-distance especially.
Traders said that the agreement between the two companies appears to be more of a client/service relationship, rather than a real joint venture. Cisco is to give MobilCom access to its technology for Internet applications.
Traders said that there is no fundamental justification for the share's early surge.
"The statement is typical for (MobilCom's majority shareholder and Chairman Gerhard) Schmid: as soon as he has information, he says it, the share price goes up, and the real information comes in little by little," a trader at DG Bank in Frankfurt said.
"It'll be important to see whether the deal goes beyond Internet telephone services to encompass data transfer, for which the outlook is better," she added.
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