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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: Sawtooth who wrote (6893)	2/25/2000 9:23:00 AM
From: Ruffian	Respond to of 13582

<The timing of the Qualcomm delay ''coincided with the breakdown of the EU-China talks, where the sticking point is really telecommunications,'' said Fred Hu, chief China economist at Goldman, Sachs & Co. ''If China were to go all the way to CDMA, that would threaten the position of the European suppliers.''> Qualcomm Delay Highlights Political Risks of Business in China By Alison Jahncke Qualcomm Delay Highlights Political Risks of Business in China Hong Kong, Feb. 25 (Bloomberg) -- China's decision to postpone a new mobile-phone network using Qualcomm Inc.'s digital technology is the clearest sign yet that foreign investors in China are hostage to politics. It was just last week that Qualcomm Chief Executive Irwin Jacobs hailed a new pact with China Unicom, China's No. 2 phone company. From Beijing, Jacobs said it was a sign that U.S.- developed code division-multiple access technology would rapidly expand in the world's most populous nation. Now, Qualcomm shares are sliding after a report that its agreement has been delayed. Some analysts said Qualcomm may be a victim of waning political support in the U.S. for China's bid to join the World Trade Organization, even as pressure mounts for China and the European Union to reach their own WTO pact. The Qualcomm project is ''a political negotiating tool,'' said Joe Locke, a telecommunications analyst at ABN Amro in Hong Kong. ''The government has interest in this only if they get something back from the U.S.'' Qualcomm is counting on China to boost revenue and profits for its CDMA technology, the world's fastest-growing mobile-phone standard. China's number of cellular-phone users is forecast to increase 63 percent this year to 70 million. San Diego-based Qualcomm fell 4.9 percent yesterday after the Asian Wall Street Journal reported that China will indefinitely delay its project. Ericsson AB, which is bidding to supply network equipment for the project, said yesterday that a planned meeting with China Unicom was postponed. Taiwan Granted, it's still unclear precisely which Chinese state agency is driving the decision to postpone the Qualcomm project. China's information ministry said today it hasn't ordered a postponement of the network's construction. A spokesman left open the possibility, however, that other government ministries may have made the decision. ''The Ministry of Information Industry didn't issue anything to delay the CDMA project,'' said Yuan Sutai, a spokesman for the department. ''We don't know if other government departments issued an order to postpone the project.'' Still, much has changed in the nine days since Jacobs signed the China Unicom pact. On Monday, China issued a vitriolic verbal attack on Taiwan, threatening to invade if the island delayed talks to reunify. U.S. Senator John Kerry responded by saying ''many of us are surprised by the bluntness and unacceptability of this statement.'' A political fight would hurt efforts by the Clinton administration to persuade Congress to grant Chinese exporters permanent access to the U.S. market. Granting ''normal trade relations'' would, in turn, smooth China's entry to the WTO. EU-China The CDMA delay could be a tactic to tip the balance back in China's favor. ''It may change some minds in Congress, and that could make the difference,'' said Andy Xie, chief China economist at Morgan Stanley Dean Witter. ''If WTO is not approved, then this project will definitely not happen.'' While the delay is unlikely to derail the Qualcomm project, China could opt instead for a rival standard, such as the latest version of Europe's global system for mobile communications, or GSM -- currently the dominant standard in China. European phone companies are pushing for greater access to the Chinese market so they can compete on a level footing with their U.S. rivals, an issue that helped scuttle China-EU talks yesterday. The timing of the Qualcomm delay ''coincided with the breakdown of the EU-China talks, where the sticking point is really telecommunications,'' said Fred Hu, chief China economist at Goldman, Sachs & Co. ''If China were to go all the way to CDMA, that would threaten the position of the European suppliers.''