Rs, here's one to buy and would you believe it's not Seattle based. It's based down here in San Diego. Now, unfortunately I don't have a big position in Qcom but I do in Leap Wireless. You can't be a bear for ever. You should by some too.:-)
ps
I'll be back in Seattle @ the beginning of next month. I talked to my sister up there and she told me the traffic still sucks.
>>Investors talk up Qualcomm
Shares climb 13% on news of deal with Ericsson, truce
By Mike Drummond
STAFF WRITER
March 27, 1999
Shareholders were smiling and fence sitters were grinding their teeth yesterday as Qualcomm and Leap Wireless International stock market prices soared to record highs in the wake of a deal and patent-lawsuit truce between Qualcomm and Swedish phone giant Ericsson.
Qualcomm stock closed up 13 percent, at $111.561/4, while spin-off Leap topped off at $13.433/4, up nearly 30 percent from the previous day's close.
The fortunes of Qualcomm and Leap depend on CDMA, or code division multiple access, as Qualcomm's mobile phone technology is known.
In the deal announced Thursday, Qualcomm is selling an ailing business unit to Ericsson, the world's third-largest phone maker. With the purchase of Qualcomm's infrastructure division, Ericsson will begin making CDMA phones and equipment for the first time, paying Qualcomm royalties while spreading CDMA technology worldwide.
Qualcomm's infrastructure unit makes mobile phone base stations, essential equipment that handles traffic with mobile phones, but a division that dragged at company earnings.
Terms of the deal were not disclosed. Qualcomm said it will take a one-time charge and provide clarification of the financial impact of the agreement in a second-quarter earnings statement to be released April 20.
Ericsson will take over two Qualcomm buildings in Sorrento Valley and assimilate 1,000 to 2,000 employees locally and in Boulder, Colo. Ericsson is aiming to take over its new acquisition May 24, pending regulatory hurdles, chief executive Sven-Christer Nilsson said yesterday.
While many brokerage firms remained bearish on Qualcomm, others upgraded earnings predictions and ratings or maintained "buy" recommendations.
Everen Securities raised this year's earnings-per-share estimates to $2.89, up from $2.75. The brokerage rates Qualcomm stock a "buy."
"Analysts will find it hard to continue to be negative on this company," said Everen analyst Mark Roberts, who owns shares of Qualcomm. "We'll see a significant change in emotion on Wall Street regarding investing in Qualcomm."
Yet others are hanging back, unwilling to boost Qualcomm stock until more financial numbers are available. First Albany Corp., ABN Amro and Credit Suisse First Boston are among those recommending a "hold" on Qualcomm.
"We don't even know what Qualcomm is getting" for the infrastructure division, said First Albany analyst Raj Srikanth.
A source close to the transaction said Ericsson paid $250 million.
Thursday's detente also involved Ericsson and Qualcomm settling a 21/2-year patent dispute. Ericsson had accused Qualcomm of filching patented technology for CDMA.
But Qualcomm, with relatively puny annual revenues of $3.3 billion compared with Ericsson's $22.3 billion, stared the Swedish Goliath in the eye -- and Ericsson blinked. Under terms of the settlement, Qualcomm will collect royalties from sales of all types of CDMA, even the proposed breed of CDMA that Ericsson is developing and planning to plumb into future generations of mobile devices. Those so-called third-generation, or 3G, devices will access the Internet at super-fast speeds and will be capable of remote video conferencing.
Ericsson has no CDMA products. Qualcomm is expected to get most of the royalty payments because it owns most of the patents -- the closest thing the telecommunications industry has to free money, said BT Alex Brown analyst Brian Modoff.
"Now Qualcomm gets royalties on every CDMA sale," said Modoff, who has rated the company a "buy" since last summer.
Qualcomm shares could shoot even higher if the company announces a stock split, which last happened in February 1994, when the price flew to $86 a share. A split doesn't directly increase the value of a company's shares, but often indirectly boosts consumer demand for -- and therefore the price of -- a corporation's stock. Qualcomm officials do not comment on stock splits before they occur.
Copyright 1999 Union-Tribune Publishing Co.
>>LEAP WIRELESS INTL INC COM(LWIN)
Bid: 13 7/16 BidSize: 0 Open: 11 1/2
Ask: 13 9/16 AskSize: 0 Close: 10 3/8
Last: 13 7/16 High: 16 3/4 Div.: 0.00
Change: +3 1/16 Low: 10 5/16 Yield: 0.00
A.High: 16 3/4 P/E: 0.00 Volume: 2840200
A.Low: 2.687 EPS: 0.00 Market :NASDAQ NM<< |
