Here we go again. From WSJ online and SI Coming Into Buy Range:
July 9, 2000
Cell-Phone Service Providers in Korea
May Hang Up on Qualcomm's WCDMA
By HAE WON CHOI
Staff Reporter of THE WALLize="-1"> STREET JOURNAL
South Korea's top three cellular-phone service providers are leaning away
from adopting Qualcomm Inc.'s next-generation technology for mobile
telecommunications services, but they said a final decision hasn't yet been
reached.
SK Telecom Co., Korea Telecom Corp. and LG Telecom Co., which are
all vying to get licenses from the South Korean government to provide
next-generation services, said they prefer to adopt the
wireless-code-division-multiple-access, or WCDMA, technology from
Finland's Nokia Corp. and Sweden's Telefon AB L.M. Ericsson rather
than Qualcomm's CDMA2000 technology. All three companies, however,
said their preferences may change.
The main reason appears to be cost, they said. Qualcomm holds patents
for both WCDMA and CDMA2000, but officials at the three companies
said Qualcomm asks for higher royalties than Nokia and Ericsson. "It
would save us money to use Nokia and Ericsson's technology over
Qualcomm's if we decide to use WCDMA," said Won Hong Sik, a
spokesman for SK Telecom. Currently, all of South Korea's
cellular-phone services use Qualcomm's current CDMA technology, and
royalties from South Korea have been a key source of revenue for
Qualcomm.
Officials who were able to talk about Qualcomm's royalty rates in South
Korea couldn't be reached for comment.
South Korea's Ministry of Information and Communication plans to award
three licenses for next-generation mobile services, called IMT-2000, by
the end of the year, and companies are expected to place their bids by the
end of September. "When the companies place their bids, each bidder
must decide whether it is going to adopt the CDMA2000 or the WCDMA
technology," said a spokesman at the ministry. "So we will know [in]
September what technology each company will choose."
Both technologies make possible sophisticated cell-phone features, such as
high-speed Internet access and Web browsing.
Christine Trimble, a Qualcomm spokeswoman, said Qualcomm "doesn't
believe an official technology decision has been made in Korea," adding
that the company was "in ongoing conversations with our customers there
and with the government."
Brian Modoff, an analyst at Deutsche Bank Alex. Brown in San Francisco,
noted that some cell-phone manufacturers, including Samsung and
Hyundai, have already signed licenses for both CDMA2000 and
WCDMA with Qualcomm, and will thus be paying Qualcomm royalties no
matter what the three service providers decide.
Shares of Qualcomm slid in heavy trading on Friday following the reports
from South Korea. The stock dropped $5.0625, or 8.2%, to $56.625. It
was the latest blow to the stock, which has been on a wild roller coaster
ride this year. In January, Qualcomm's stock hit a 52-week high of $200.
Separately, the San Diego Union-Tribune reported Friday that U.S.
investigators are investigating hacker attacks against Qualcomm. In
December, hackers tried to break into the company's computer network,
but failed to penetrate the electronic firewall and other network devices. A
Qualcomm spokeswoman declined to comment because the case is under
investigation. According to the newspaper, court documents indicated that
the alleged intruder is a graduate student in computer science at the
University of Wisconsin. Charges haven't been filed.
--Wall Street Journal staff reporters Pui-Wing Tam and Khanh Tran
in San Francisco contributed to this article. |
