hey I still own shares long, watch who you call a bear.
<<Qualcomm Falls as S Korean Ruling Threatens Growth
San Diego, May 24 (Bloomberg) -- Qualcomm Inc. shares fell 3.3 percent after the government of South Korea, the biggest market for the company's cell-phone technology, issued a ruling that will boost phone prices there by about $176.
Qualcomm fell 2 5/8 to 76 3/4, the lowest close since November. Trading of 40.7 million shares made Qualcomm the seventh- most active U.S. stock. The shares have tumbled 56 percent this year. They dropped 10 percent yesterday.
South Korea's government said it will ban the country's four cellular service providers from paying subsidies starting June 1 to cut the phones' cost and attract new subscribers. Phones with Qualcomm chips based on the company's code division multiple access standard are used by about 25 million people in Korea.
``It could really dampen the growth of CDMA,'' said Edward Snyder, a Chase H&Q analyst, who rates Qualcomm a ``market perform.'' The latest ruling ``certainly looks like it's got teeth,'' compared with earlier ones banning subsidies in the country, he said.
Qualcomm spokeswoman Christine Trimble declined to comment on how the ruling might affect the company.
Today's drop is the sixth straight declining session for Qualcomm shares. The company is the sixth-worst performer in the Standard & Poor's 500 Index this year, after surging 27-fold in 1999 to become the index's biggest gainer.
Growth in Korea
South Korea accounted for about 30 percent of worldwide CDMA phone sales in the first quarter of 2000, Snyder said. The number of CDMA-based phone users in the Asia Pacific region rose 76 percent to 31.7 million in March from 18 million a year earlier.
The phone subsidies have increased so much and heated up competition to the point that some service providers, such as Korea Telecom Freetel, are struggling to be profitable.
Korea Telecom Freetel shares surged 5,150 won (US$4.54), or 12 percent, to 48,200. Hansol M.com Co., another service provider, rose 1,650 won, or 12 percent, to 15,650. SK Telecom Co., Korea's No. 1 cell-phone service provider, fell 10,000 won to 328,000.
Shares of Korean handset makers fell. LG Information & Communications Ltd., South Korea's No. 2 cell-phone maker, fell 12,800 won, or 15 percent, to 72,800. Samsung Electronics Co., the world's No. 4 cell-phone maker, fell 9,000 won to 310,000.
The threat to growth in South Korea comes as Qualcomm is pushing to expand in China, which could turn into an even larger market.
In February, China United Telecommunications Corp., the country's No. 2 phone company, agreed to license Qualcomm's technology to build a CDMA network. Then reports surfaced that the Chinese government was delaying the project in what analysts said was a ploy to get U.S. support for China's bid to join the World Trade Organization.
The Chinese government has denied such delays, and Qualcomm officials have said they're optimistic that use of CDMA will expand in China this year. >>
Greg |
