Qualcomm Up 8% On Renewed Hope For
Chinese Market
Dow Jones Newswires
By Johnathan Burns
NEW YORK -- Shares of wireless technology maker Qualcomm Inc.
(QCOM) jumped once again Tuesday after a Chinese official said the
country would use the company's mobile telephone technology.
Wu Jichuan, minister of information industry, told The Financial Times that
the country must introduce and adopt Qualcomm's technology to meet the
needs of the market. He also said China's on-again, off-again relationship
with Qualcomm's wireless technology has been the result of various views
expressed in the media and he criticized the state media's characterization
that China Unicom Ltd. (CHU) would not use Qualcomm's technology.
Unicom is China's second-largest mobile phone service provider.
If Jichuan's comments reveal anything, it's how important investors believe
the near-term Chinese market is to Qualcomm.
Qualcomm's stock recently traded up 8.6%, or $5, to $63.13. More than
13.5 million shares had swapped hands compared with the daily average of
15.5 million.
"I think most investors are in a 'show me' mode," said Matt Hoffman,
telecommunications equipment analyst with Wit Soundview. "They need to
see more than a comment from a Chinese official. I do think Qualcomm's
stock has had a support level at $60 for two months now. People see a
five in front of it and buy it reflexively."
Jichuan's statements follow reports last week that Unicom is telling
network-equipment makers that it may build a network based on
Qualcomm's proprietary Code Division Multiple Access, or CDMA,
technology as early as January.
Following that report, Qualcomm's stock traded up about 5%.
Uncertainty in key Asian markets has hammered Qualcomm's stock
throughout the year. Qualcomm. which traded at a 52-week high of $200
in January, has steadily dropped due to lack of visibility in China, a ban on
handset subsidies in Korea and the yet-to-be resolved issue of which next
generation wireless technology Korean service providers will choose.
Korean companies are considering Qualcomm's CDMA-2000 technology
or a wideband CDMA technology supported by European equipment
makers. Qualcomm executives maintain whichever wireless standard is
used will utilize its patented technology.
-By Johnathan Burns; Dow Jones Newswires; 201-938-2020;
johnathan.burns@dowjones.com
Briefing Book for: CHU | Q.CUC | QCOM |
