November 23, 1999
Tech Center
Nextel Plans to Buy Handsets
From Japanese Firm Kyocera
By NICOLE HARRIS
Staff Reporter of THE WALL STREET JOURNAL
Nextel Communications Inc. said Japanese manufacturer Kyocera Corp. has
tentatively agreed to provide the phone company with a new generation of
wireless handsets.
The move marks the first time Nextel will get phones from a manufacturer
other than Motorola Inc., its longtime partner and sole technology provider.
Motorola, Schaumburg, Ill., holds the licenses for the iDEN, or "integrated
digital enhanced network" technology that Nextel uses to provide its wireless
service. Motorola also owns a 15% stake in Nextel.
Nextel said the handsets are expected to be
available by late 2000. Terms weren't disclosed,
but a similar contract for Motorola is valued at
more than $1 billion annually.
Motorola was down $4.375 to $120.75 at the 4 p.m. Monday New York
Stock Exchange close. Nextel was up 31.25 to $98.625 at 4 p.m. in Nasdaq
Stock Market trading.
Nextel executives were quick to point out Monday that the decision to look
for an additional supplier was not a snub of Motorola. Motorola "has done a
terrific job ... in terms of development, feature functionality and pricing but it's
in our best interest to have additional sourcing of handsets," said Tim
Donahue, Nextel's chief executive.
Mr. Donahue said a handset contract with Kyocera should help Nextel meet
its "ever increasing demand" for cell phone service. Nextel's national service
blends traditional cell phones with a distinctive "walkie-talkie" feature. The
Reston, Va., company has a loyal following of business customers who rack
up hefty monthly bills. During the third quarter, Nextel added 458,000
subscribers in the U.S., bringing its domestic total to about four million.
Kyocera is known in the industry for its innovative products. The company,
for example, manufactured a cell phone that is equipped to transmit streaming
video. For the year ended March 31, Kyocera had consolidated annual sales
of $6.1 billion and net income of $239 million.
Nextel and Kyocera have a memorandum of understanding, a first step
toward a binding contract. Kyocera now has to license the technology from
Motorola.
Peter Aloumanis, Motorola's director of U.S. customer operations for iDEN
subscribers, said Motorola is already in discussions with Kyocera. Motorola
and Kyocera negotiated a similar licensing agreement in 1996 for wireless
phones for Iridium LLC, the satellite-phone service.
When Motorola signed its initial contract with Nextel in 1995, the
telecommunications-equipment concern said it would assist Nextel in finding
additional suppliers for the iDEN technology. Mr. Aloumanis said that had
been difficult since competing manufacturers weren't sure if Nextel's service
would draw enough customers to merit more than one supplier. "Nextel was
able to show significant growth this year," he said. "They're not the stepchild
anymore, they're primetime." |
