Qualcomm Shares Surge on China Confirmation
Monday December 4 5:43 PM ET
LOS ANGELES (Reuters) - Shares of wireless technology company Qualcomm Inc. (NasdaqNM:QCOM - news) jumped 8 percent on Monday after China reaffirmed its intent to use the company's wireless CDMA (news - web sites) technology.
Qualcomm's stock rose $7 to $90 on Nasdaq. San Diego-based Qualcomm said on Monday it signed a memorandum of understanding with China's Ministry of Information Industry to deploy its CDMA standard in a network to be built by state-backed carrier China Unicom.
The memorandum confirmed a January agreement that had been plagued by uncertainty over whether it would ever be implemented in the high-growth, potentially huge Chinese market.
CDMA, or Code Division Multiple Access, is Qualcomm's proprietary wireless technology that competes with two other global standards.
The on-again, off-again status of the deal helped send Qualcomm shares plunging from a high of $200 in January to a 52-week low of $51.50 in July.
``It certainly looks like everything's a go, but we've seen previously that things aren't always as they seem.'' said A.G. Edwards analyst David Heger, who has an accumulate rating on the stock.
Heger added that other factors, such as concerns over how widely its technology will be adopted in Korea and its exposure to troubled satellite phone company Globalstar, make Qualcomm vulnerable in the near term.
Also on Monday, SG Cowen initiated coverage of Qualcomm with a buy rating and a 12-month price target of $99. The brokerage cited Qualcomm's attractive position ahead of the launch of new third-generation wireless services.
Separately, Qualcomm and semiconductor chip maker Texas Instruments Inc. (NYSE:TXN - news) agreed on Monday to cross license their patent portfolios, allowing each company to supply integrated circuits for all wireless standards.
The deal allows the company to share Texas Instruments' patents for analog and DSP technology, which convert real-world sounds such as voice and music into digital data.
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