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

To: jhg_in_kc who wrote (51007)	11/19/1999 12:49:00 AM
From: Ruffian	Read Replies (1) \| Respond to of 152472

Wireless Internet,WSJ> SMARTMONEY.COM: Wireless Internet: The Virus is Spreading By ALEC APPELBAUM Smartmoney.com NEW YORK -- Here's how things work these days in the wireless telecom industry: On Wednesday, phone maker Ericsson (ERICY) announced to analysts that production problems in its handset business would make it difficult to maintain margins going forward. The stock dropped about a point on the news. Then Thursday, Merrill Lynch analyst Anita Farrell wrote that Ericsson stands to benefit from the vague, but sparkling, promise of "wireless data" - the delivery of Internet fodder over cell phones. The stock shot up 9% in an eyeblink. Ericsson has had some major performance problems this year, but that hasn't stopped the stock from roaring more than 123% since April. There are also uncertainties about Qualcomm (QCOM), which announced Wednesday that it would sell its low-margin hand-set business by "early next year," so it can focus on its CDMA patents and equipment ? technology that may become the favored standard for wireless Internet access. Qualcomm shares are up a mere 1,164% this year but had been dropping this week as investors took profits. The "early next year" report reversed the slide, and the stock gained almost 4% today. Which brings us to Nokia (NOK), a wireless telecom with very few negatives. The world's biggest maker of cell phones benefited from hikes in price targets at Prudential Securities and Merrill Lynch today. Merrill's Farrell, writing from London, raised her price target along with her 2001 earnings estimates. Why? Wireless data, of course. Pru's Luke Szymczak, noting Ericsson's remarks about possibly lackluster margins in handset sales this quarter, said that weak performance from Ericsson would reduce pressure on Nokia to lower its prices. The stock, up 161% this year, gained another 8% today. These stocks (and Motorola (MOT), which is pursuing a $12 billion merger with General Instrument (GIC) designed to position the company to participate in the wireless Internet boom) have suddenly turned teflon. Good or bad, they've got a story now, and that's why they're all sitting at or near their 52-week highs. Investors seem to be treating any wireless-equipment stock of any size as a magic potion. And analysts are feeding the frenzy. Josepthal & Co.'s Mirva Antilla initiated coverage on Ericsson today with a Buy rating. Antilla duly noted the profit margin squeeze but said she expects phone profitability to improve next spring. That would keep yearly profits intact, she said, and therefore the valuations should stay high as investors continue to allow the potential of the wireless Internet to dazzle them. (Antilla, a Finn, reports that banks in Finland already allow users to check their balances on their wireless phones.) All this exuberance rests in the promise of subscriber growth and better living through wireless Net access. The concept: The hundreds of millions of folks who now use cell phones to chat will one day also use them to check stock prices, make rental-car reservations and receive special sales offers. Why should this make manufacturers sparkle? It's a two-step assumption. If wireless Internet services become widespread, explains Wall Street Journal All-Star analyst Wojtek Uzdelewicz of SG Cowen, people may chuck their current phones and replace them with pricier ones. (Ka-ching!) Then data will drive a lot of traffic, which will drive infrastructure growth. (See above sound effect.) Under that assumption, even cautionary notes can sound sweet to investors. "When you have a whole sector that is hot, people say, 'Look at Motorola: If we had bought it when it was a little out of favor, we would have made a lot of money,'" explains Uzdelewicz. So Ericsson sank on Wednesday to become a hot property on Thursday. Can't argue with that. For more information and analysis of companies and mutual funds, visit SmartMoney.com at smartmoney.com