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

To: Percival 917 who wrote (42249)	9/23/1999 7:53:00 AM
From: Ron M	Respond to of 152472

The following is the Leap news from the SD Union Tribune: 2 major deals are sealed by Leap By Noble Sprayberry UNION-TRIBUNE STAFF WRITER September 22, 1999 SAN DIEGO -- Leap Wireless International yesterday announced two multimillion-dollar agreements that will enable it to expand the Cricket Communications wireless network to cities across the United States. Lucent Technologies and Ericsson each signed $330 million contracts that will create infrastructure necessary for expansion of the Leap subsidiary. Cricket's wireless services will charge customers one price for all calls made and received in their locale. Also, the company's plans allow customers to pre-pay for anticipated long-distance charges. "We believe we are opening up a whole new market," Leap CEO Harvey White said. Details of the financing agreements were not released but White did say they were pivotal as Cricket positions itself for growth. While Cricket hopes to compete against the nation's other wireless providers, the service is now only available in Chattanooga, Tenn., where it began in March. The idea is to tap people fearful of wireless rates that bring higher bills with greater use, White said. The initial rollout of the flat-rate pricing earned Cricket 8,700 customers in Chattanooga. Some 75 percent of those customers did not previously have wireless service, he said. To keep infrastructure and billing costs down, however, Cricket does not allow customers to use the system for calls outside of the geographic area served by the company's local network. With 50 U.S. Federal Communications Commission licenses granting expansion into about 25 domestic phone markets, Leap is prepared for an aggressive deployment, White said. Nashville should join the network before year's end, White said. Other potential markets include Dayton, Ohio; Little Rock, Ark.; Spokane, Wash.; and Tulsa, Okla. Agreements with Lucent and Ericsson will supply credit for equipment, training, deployment and operating expenses, said Dan Pegg, Leap senior vice president of public affairs. "Certainly the vendors had to have enough confidence in us and our concept, which is completely new, to provide financing," Pegg said. New Jersey-based Lucent's participation includes wireless equipment and services, including base stations and switches. Similarly, Sweden-based Ericsson will bring technology such as switching equipment and network design. Lucent public relations manager Kevin Beagley said Cricket's potential makes the risk palatable: "They have a niche market that's really been untapped until now," he said. "The business plan they presented to us is a good bet." Interest in Leap wasn't unexpected. Leap was spun off from Qualcomm a year ago. Last week, Morgan Stanley Dean Whitter analyst Colette Fleming initiated coverage of the stock with an "outperform" rating. In a research note, Fleming said Leap has a strong management team and a compelling valuation. In an interview yesterday, Fleming said vendor financing such as is being provided by Lucent and Ericsson was expected and factored into the earlier forecast. After announcement of the Lucent and Ericsson contracts yesterday, Leap stock closed at $22.871/2, up $5.371/2, on volume of 6.55 million shares. The high volume of trades indicated the agreements drew attention to Leap, winning support from people who might have doubted viability of the young company, said Kevin Roe, a New York-based analyst for the Dutch bank ABN AMRO. "This is a very early-stage business and they have a lot of market to build," Roe said. "We have confidence in them executing their business plan, but not everyone believed that, and the change was evidenced in the run-up of stock."