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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (34263)	7/8/1999 7:33:00 AM
From: Ron M	Read Replies (3) \| Respond to of 152472

FYI San Diego Union Re: Sony uniontribune.com Sony set to close wireless division 200 local positions will be eliminated when plant shuts By Mike Drummond UNION-TRIBUNE STAFF WRITER July 7, 1999 RANCHO BERNARDO -- Sony's five-year advance into the North American mobile phone market ended yesterday when the Japanese electronics giant said it would stop making and selling wireless phones domestically -- in the process eliminating 200 local positions and catching some carriers by surprise. The company hopes to shut down the Sony Digital Telecommunications of America plant by the end of September. The Rancho Bernardo plant is Sony's only North American wireless phone manufacturing center. A spokesman said the company will try to find laid-off workers positions at the local Sony Technology Center, which employs about 3,300. That division makes computers and specialized televisions, among other devices. Others will receive severance packages based on tenure, salary and other variables. Sony raised the white flag here amid frenzied competition, spurred in part by the demand for mobile phones and the rush to fill that demand by major manufacturers able to produce and market cheaper phones in high volume. "With the environment here changing so rapidly, it was much more difficult to remain competitive," said Sony spokesman John Dolak. The company will still make and sell mobile phones in Asia and Europe, Dolak added. Sony gained a toehold in the domestic wireless phone market in 1994, when it signed a letter of intent to build phones with Qualcomm, based on Qualcomm's code division multiple access or CDMA technology. Sony began making those phones in January 1995, Dolak said, under a joint venture called Qualcomm Personal Electronics, or QPE. That operation is separate from Sony Digital Telecommunications of America. Sony will continue to fulfill its part of the QPE operation, in which it owns a 49 percent stake, Dolak said. Although Sony employees will work at QPE, from now on they will be making only Qualcomm-branded phones. It's unclear how long Sony will continue to participate. Termination of the existing contract "is to be determined by top management at Sony," Dolak said. Sony's exodus leaves fewer major wireless CDMA phone manufacturers targeting the North American market, including Denso, IGS/LG, Motorola, Nokia, Qualcomm, Sanyo and Samsung. Qualcomm, which recently eclipsed Swedish rival Ericsson as the nation's second-leading seller of wireless phones, said it will benefit from Sony's departure from the domestic scene. "It's an opportunity for us to increase production at QPE," said Qualcomm spokeswoman Christine Trimble, who noted that the plant churns out 650,000 to 700,000 phones a month. She did not know whether increasing capacity will mean Qualcomm will add jobs. Analyst Pete Peterson with Volpe Brown Whelan, said of all the manufacturers targeting the domestic market, Qualcomm stands to gain the most. Qualcomm no longer has to share factory floor space, capacity and product with Sony, Peterson said. Instead, Qualcomm gets what it's been itching for -- increased manufacturing capacity for its hot-selling phones. More than an inability to manufacture phones in volume doomed Sony domestically, Peterson added. Sony failed to effectively market its phones, and was never able to leverage the considerable brand-recognition it has with other consumer electronics. "Qualcomm outperformed a company some thought it would succumb to," Peterson said. Some companies selling Sony-brand phones were caught off guard by yesterday's announcement. "We were just talking with Sony today," said Jenny Bourbiel, spokeswoman for GTE Wireless, one of five carriers serving the San Diego-area market. "We're supposed to be testing the new Sony phones." Similarly, a representative at AirTouch Cellular, another albeit smaller Sony customer, said the company only heard whispers and rumors that Sony was pulling out of North America. A Sprint PCS spokeswoman said it will sell its remaining inventory of Sony phones and will still offer warranty and technical support for those models.