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Technology Stocks : QUALCOMM-The Wireless Wonder in 1999 -- Ignore unavailable to you. Want to Upgrade?

To: GO*QCOM who wrote (290)	5/30/2000 11:08:00 PM
From: GO*QCOM	Read Replies (1) \| Respond to of 343

Shifting Sentiments Send Qualcomm Plunging, then Soaring By Christopher O'Connor SHARES OF WIRELESS TECHNOLOGY leader Qualcomm (QCOM) swung wildly Tuesday amid conflicting signals over its future in crucial Asian markets. The maker of mobile phones and transmission systems fell as much as $6.06 then soared $10.57 higher before finishing the day at $76.38, up $10.31, or 16%. Investors remained jittery over the prospects for growth of the company's patented code division multiple access, or CDMA, transmission technology in China and South Korea. While several analysts offered reassurances Tuesday that the company's long-term picture is bright, at least one remained pessimistic. By the close of trading, investors had turned optimistic, helped by the market's bargain-hunting mood. Qualcomm ended an eight-day losing streak that had chopped 40% off the stock's value. "Despite musings and confusion in the press, the fundamental outlook for Qualcomm remains strong," said A.G. Edwards analyst David Heger, one of the optimists who offered opinions on the company Tuesday. Qualcomm stretched into territory that was beyond wild last year as CDMA, a digital system that the company says offers clearer sound, longer battery life and faster data transmission, caught on in Asia, South America, the U.S. and other regions. The stock came into 1999 sporting a tepid price of $7.53. It entered 2000 as one of the brightest stars in the investment sky ? its high of $179.25 represented a more-than 2,200% rise. Since then, a broad technology selloff and doubts about Qualcomm's growth have cut its price by more than $100. Wire reports Tuesday said a tentative deal Qualcomm had with China United Technologies (Unicom for short) to provide the phone company with CDMA technology has fallen through. The deal has been held up while China awaits entry into the World Trade Organization. The U.S. House helped that along last week when it approved permanent normalized trade relations with China. However, while the situation has dragged on, competing digital technologies, including the global system for mobile communications (GSM), have caught on in China. Heger said this may be a problem in the short run, but he noted that other emerging wireless technologies, including GSM, will eventually use offshoots of CDMA technology, and Qualcomm will garner royalties from those businesses. Heger upgraded shares of Qualcomm to Buy from Accumulate. Alex Cena of Salomon Smith Barney said even though GSM has a head start on CDMA in China, nothing says companies there can't embrace and sell both phones, especially as the wireless explosion continues. It's happening in Australia and South America already, he said. "Why wouldn't you use it?" Cena said of a business model that supports CDMA and GSM. Cena said Tuesday's stock turnaround had mostly to do with knowledge ? the more investors understand that news out of Asia won't have much effect on the company's long-term outlook, the more they'll relax. For instance, Cena and other analysts noted that Qualcomm has other emerging businesses, including high-speed Internet wireless technology that has been accepted for use by at least three major telecom customers ? Lucent Technologies (LU), Hitachi (HIT) and Samsung. "Here's a company with rapid acceleration in earnings growth," Cena said. The Street expects Qualcomm to post earnings per share of $1.08 this year, $1.42 a share next year and $1.50 a share in 2002. Heger joined Cena in refuting concerns that South Korea's decision to end subsidies on mobile phones would cripple CDMA's ability to compete with phones using other systems. The subsidy loss could raise the price of a Qualcomm phone by as much as $179, according to one estimate. Heger called the Korean situation a non-issue, saying Korea has become such a mature market for cell phones that replacement phones are more popular than phones bought by new subscribers ? and the subsidies never covered replacement phones. More bearish was Bernstein's Vadim Zlotnikov, who declared that the China and Korea issues as serious market risks. Combined with existing competition from Nokia (NOK), Samsung and other companies, Zlotnikov said a 12-month price target of $79 is more appropriate than his earlier mark of $109. He also was not convinced that CDMA would dominate the next generation of phone technologies. If it doesn't catch on to the degree Qualcomm hopes, then lower revenues are likely, he said. Regardless of what happens, the glory days for Qualcomm are most certainly gone, said Larry Wachtel, investment strategist for Prudential Securities. "Some of the underpinning that had bolstered the Qualcomm stock has been reduced," he said.