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

To: Uncle Frank who wrote (56845)	12/27/1999 7:52:00 AM
From: Ruffian	Read Replies (2) \| Respond to of 152472

Kyocera Surges a Second Day on Purchase of Qualcomm Phone Unit Kyocera Surges a Second Day on Purchase of Qualcomm Phone Unit Tokyo, Dec. 27 (Bloomberg) -- Kyocera Corp. shares soared as much as 10 percent to a record high, capping a second day of gains since the Japanese maker of mobile phones said it agreed to buy Qualcomm Inc.'s phone-making unit, giving it a foothold in the North American cell-phone market. The maker of personal digital cellular and cdmaOne mobile phone handsets and components climbed as much as 1,960 yen to 21,310 in early-afternoon trade. Kyocera's shares have more than tripled this year on expectations the company will gain from its exposure to Japan's cell phone industry, a market expected to grow fivefold in the next 10 years. Buying a business that makes cell phones based on the code-division multiple access, or CDMA, standard that Qualcomm developed strengthens Kyocera's hand in the U.S. market too, analysts said. The agreement ''will establish Kyocera as a presence to be reckoned with in the world market for mobile phones,'' said Masaru Koshita, an analyst at Deutsche Securities Ltd. in Tokyo. Kyocera ''increases its share of the U.S. CDMA terminal market from zero to 20 percent.'' The new business ''has the potential to vastly lift Kyocera's handset business,'' said Hitoshi Kuriyama, an analyst at Merrill Lynch Japan Inc. Kuriyama reiterated his 'buy' rating on the stock and raised his long-term target price for Kyocera to 22,300 yen from 18,500 last week. Financial terms of the agreement, announced last week, weren't disclosed. Qualcomm, whose shares have surged more than 18-fold this year, is selling the handset business to focus on making chips and collecting royalties from companies that use its CDMA technology. In return, Kyocera gets a share of the CDMA handset market, now dominated by Motorola Inc. and Nokia Oyj. The Kyoto-based company will buy most of its CDMA semiconductors and software from Qualcomm for the next five years. CDMA Expansion Kyocera, which said last month first-half earnings in the six months ended Sept. 30 rose 29 percent thanks to healthy demand for phones, said it expects to make 16 million CDMA handsets in the fiscal year ending March 31, 2001. That compares with likely sales of 3.8 million units for the current fiscal year ending March 31, said Merrill Lynch's Kuriyama. There are about 40 million CDMA users worldwide as of the end of the third quarter, according to Qualcomm. Jeff Schlesinger, an analyst at Warburg Dillon Read LLC, forecasts about 50 million users by year-end. Kyocera, also a maker of software to give wireless devices access to the Internet, said the handset business will become a unit of its U.S. subsidiary, Kyocera International Inc., and remain in San Diego. The Kyocera unit will lease some facilities from Qualcomm. The agreement with Qualcomm comes a week after Kyocera's expansion of its role in Japan's telecommunication industry through the purchase by DDI Corp., Japan's second-largest long- distance telephone company, of two domestic telecom rivals. Kyocera will be the largest shareholder of the new company, with a 15.8 percent stake. DDI will be Japan's biggest provider of international services and will have a nationwide cellular phone network once the takeover is complete. The purchase includes any Qualcomm phone inventory, its manufacturing equipment and existing commitments to customers. Qualcomm will form a subsidiary to employ workers from its handset unit and contract them out to Kyocera for as long as three years. Employees of Qualcomm Personal Electronics, a joint venture with Sony Corp., will be transferred to Kyocera. Between them, Qualcomm's handset unit and QPE employ about 4,000 people. Shares in Qualcomm, the leading stock in the Standard & Poor's 500 Index this year, fell 18 15/16, or 3.9 percent, to 466 1/2 in Nasdaq trading Thursday. The shares rose to a 52-week high of 522 1/8 Wednesday. San Diego, California-based Qualcomm, which expects the sale to close by the end of February, will take a pretax charge of $30 million in its fiscal first quarter ending this month. NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min.