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Technology Stocks : Ericsson overlook?

ERIC 9.395

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Nov 21 9:30 AM EST

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To: Maurice Winn who wrote (3259)	5/25/1999 6:47:00 AM
From: tero kuittinen	Read Replies (4) of 5390

Maurice - we've been expecting that IS-95 order explosion for quite some time now. I think people are starting to wonder. According to Merrill Lynch, GSM and TDMA gained infrastructure market share in 1998 and CDMA and AMPS lost it - a lot. How does this fit into the grand theory of inevitable CDMA gains? As you well know the infrastructure sales closed in 1998 reflect the actual network build-ups taking place in 1999-2001. And that new study showing CDMA subscriber base growing by 18% during the first quarter of 1999 - and TDMA growing by 16,5% and GSM by 16%? When you factor in the short-lived Korean bubble during February and March - where do you think this leaves the respective growth rates during the second quarter? Since the upgrade sales in the GSM market are brisker than in the CDMA market that 2% differential in subscriber base growth is wiped out when it comes to comparing actual handset sales growth. CDMA network sales growth lags far behind GSM/TDMA and the subs growth gap is just 1,5-2% even under the artificial boost provided by Korea last quarter. We are looking at long term projections that have to be rewritten from the scratch. Forget that 56% market share for GSM handsets in 2004. We're looking at 60% if the CDMA growth keeps heading south the way it has done during the last couple of quarters. I am talking about statistics provided by independent, American research firms. Let's not confuse them with wish fulfillment. Keeping facts and fantasy separate would be a good idea right now. About Ericsson: don't look at what they say. Look at what they do. And what they're doing is putting their entire weight behind new data solutions meant to boost existing GSM and TDMA networks. What they're doing is executing an unforeseen GSM infrastructure sales offensive in China. And it's working - China Unicom is pouring literally billions of dollars into GSM equipment, much of it to Ericsson. Just compare Ericsson's statements about their willingness to sell IS-95 equipment with the recent press releases about their Chinese GSM sales. That "CDMA in China" farce is looking more and more ragged as months roll by and no development takes place. And the first numbers from Japan are in. DDI fell 30% short of their earlier projections, landing 500 000 subs. CDMA in Japan looks a lot like it looks in Australia and China - a rural alternative for sparsely populated regions. Just for kicks - check out the subscriber growth of Canada's leading CDMA operator and compare that to Canadian Fido GSM subscriber growth during 1Q 1999. You might want to look at those numbers and contemplate for a while. I don't understand why you insist on confusing cdma2000 with W-CDMA. Here are some key differences: W-CDMA was developed by Nokia and Ericsson - cdma2000 was not. W-CDMA has landed important development deals in Europe, Korea, China and Japan - cdma2000 has not. First calls made with W-CDMA phones took place months ago - no such luck with cdma2000. All four Finnish 3G licenses went to W-CDMA and at least four out of five of the new British 3G licenses are expected to go to W-CDMA. I think we both know which company will definitely not land the chipset sales for all this W-CDMA equipment. Tero

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