MOT Blows It Again? Msft asked MOT but MOT Rejected
Qualcomm Inc. and Microsoft Corp. are forming a wireless-communications venture, aimed at boosting the popularity of so-called smart digital networks that combine computing and communications, people familiar with the matter said.
A new jointly owned company, to be announced next week, will concentrate on software and services that help companies roll out large and complex wireless-data networks, industry executives said. The venture, planned over the past several months, will also offer a network-operations center designed to manage communications and security between internal corporate networks and public-communications systems, these people said.
Both Qualcomm and Microsoft declined to comment on the venture, pending a formal announcement Tuesday.
If successful, the new company could be a boon to the wireless-data
business, an advanced version of paging-type services that has long
promised, but never delivered, as a big revenue source for
telecommunications providers. Several large communications ventures,
including AirTouch Communications Inc. and the ATT Wireless division of AT&T Corp., are expected to test or endorse the venture soon.
"For wireless data, this is the holy grail," said one person familiar with the arrangement. "The toughest part of the business has always been safely connecting corporations' networks to new communications systems."
The joint venture comes as Microsoft is struggling to counter the perception that it is behind other players in the wireless business. Industry executives say the software company has been irked at the formation of Symbian, a wireless-phone alliance that includes Motorola Inc., Nokia oy AB of Finland and Ericsson AB of Sweden. Symbian plans to base development of future wireless phones on an operating system from a British company, Psion PLC, passing over Microsoft's Windows CE software.
But people familiar with the plan say the venture won't directly compete with Symbian. Executives of 3Com Corp., whose popular Palm Pilot organizer was recently melded with a digital phone by Qualcomm, were quick to say their plans won't be affected by the Qualcomm-Microsoft venture.
Yet there is little dispute that Microsoft is playing catch-up in the
wireless field. Windows CE, though it is being used in hand-held computers, is widely regarded as relatively large and slow for use in inexpensive telephones. In a recent internal memo "The Era Ahead," Bill Gates cited Symbian as potent competition, and some industry executives believe it was particularly stung by Motorola's involvement with Symbian.
In fact, one person familiar with the matter said Microsoft recently tried to convince top Motorola executives to start a separate wireless venture,and offered to bankroll the operation with as much as $500 million. The idea was rejected, the person said, because of technical advantages of the Symbian software and fears of Microsoft gaining a dominant position in another high-tech industry.
"This was discussed all the way to the top of Motorola," this person said.Neither Microsoft nor Motorola would discuss the topic of any proposed venture between the companies.
But Motorola still has ties to Microsoft, and is expected to seek a way of working with the Microsoft-Qualcomm venture. Earlier this year, Motorola Chief Executive Officer Christopher Galvin and Mr. Gates appeared together at an event to promote Windows CE.
The venture will likely boost interest in San Diego-based Qualcomm, a maker of wireless-telephone equipment and satellite-communications gear, and a pioneer in advanced communications technologies. Analysts cited both the renewed growth prospects for wireless data, and the relationship with Microsoft.
"Say what you will about Microsoft, they certainly throw credibility to a market when they go at it," said Eric Zimits, analyst with Hambrecht & Quist in San Francisco.
The timing of the announcement could be good news for Qualcomm's stock. On Tuesday, Qualcomm reported fiscal fourth-quarter net income of $39.9 million, or 54 cents a diluted share, up from $30 million, or 42 cents a share, a year earlier. Revenue was $925.9 million, compared with $601.4 million.
Despite topping analysts' earnings expectations, Qualcomm's share price,which has been rising in recent weeks, fell sharply yesterday, closing at $55 a share, down $2.625.
Analysts said there was concern about continued growth in Qualcomm's
royalties on its intellectual property, which center on advanced
digital-telephone technologies, as well as fears about a drop in orders from Asia. |
