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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (5110)	12/1/2000 6:16:48 PM
From: nbfm	Read Replies (1) \| Respond to of 196546

Business Week: December 11, 2000 News: Analysis & Commentary: Telecoms AT&T Tries Downloading DoCoMo's Magic A deal brings cash and wizardry to AT&T Wireless A year ago, AT&T Wireless Group was the last company you'd turn to if you wanted to browse the Web or read e-mail from your phone. Sprint PCS Group was the U.S. leader in such services, known as wireless data. Blessed with an abundance of radio spectrum and just the right data-friendly technology, Sprint was the first to concoct attractive Web services on a cell phone. And its alliance with wireless pioneer Qualcomm Inc. gave Sprint an inside lane in the race for ``3G,'' or third-generation phones that will one day pluck music and movies from the Internet. AT&T Wireless, in contrast, has been stuck in the slow lane--but that may be about to change. On Nov. 30, the company said it would trade 16% of its shares for nearly $10 billion from Japan's NTT DoCoMo Inc. In its home market, DoCoMo runs the world's most successful wireless data network--a ``mobile portal'' with 15 million subscribers accessing 15,000 web sites. DoCoMo will share its expertise with AT&T Wireless and help its U.S. partner arm itself for the coming battle over 3G. For AT&T Wireless, the news couldn't come at a better time. Since the company was spun out of AT&T as a tracking stock last April, its shares have sunk from $32 to about $18. The unit has been strapped for cash and swamped with challenges. To compete with Sprint PCS in data services, for example, AT&T Wireless will have to acquire additional radio frequency at public auctions, beginning as early as December. Lehman Brothers Inc. analysts say that all operators combined could spend $16 billion at the auctions. Although AT&T raised a total of $10.6 billion in the April spin-off, Lehman Brothers estimates that the wireless unit currently has access to only about $3 billion of that. And it must spend $2.3 billion in the fourth quarter to fund the current business plan--so DoCoMo's cash is sorely needed. In contrast, Sprint PCS is sitting pretty: It doesn't need extra bandwidth and can raise the cash it needs for operations. VoiceStream Wireless Corp., for its part, has about $5 billion in cash from Deutsche Telekom, which paid $45 billion to buy the Seattle-based company last August. Verizon Communications will likely raise money through a wireless initial public offering, and Cingular Wireless can lean on its well-heeled parents, BellSouth Corp. and SBC Communications. HIGHER VELOCITY. With DoCoMo in its camp, the picture will brighten substantially for AT&T Wireless. The company will have access to about two-thirds of the cash coming from Japan, while its parent absorbs the rest. That, plus technical and strategic advice from DoCoMo, could give AT&T a running start in 3G services. The DoCoMo relationship ``makes it certain that AT&T will deploy 3G earlier'' than it would on its own, says Andrew Cole, head of the global wireless practice at Adventis Corp., a technology consulting firm in Boston. As a first step, AT&T Wireless will set up a wholly owned subsidiary, with DoCoMo staff, to create a mobile portal that gives cellular users easy access to the Web. This is still a far cry from any 3G Utopia. While DoCoMo will kick off 3G services next May in Japan, the U.S. won't catch up until mid-decade. That's how long it will take U.S. operators to equip their networks with powerful new base stations and to acquire spiffy new handsets. And there could be glitches on the way. Unlike in Europe and parts of Japan, where operators are leaning toward a single 3G standard known as W-CDMA, American service providers are divided into two competing camps. AT&T Wireless, VoiceStream and Cingular will likely hew to the same standard as Europe. But Sprint PCS and Verizon are committed to a rival approach called CDMA2000, which was developed by Qualcomm and may offer certain technical advantages. When 3G finally arrives, however, AT&T Wireless should be well-served by its choice of W-CDMA. Its subscribers will be able to carry a single cell phone around the planet, according to Lewis M. Chakrin, senior vice-president for corporate strategy. They'll also have a huge choice of handsets, developed by a gang of companies on at least three continents. And they'll have early access to nifty e-commerce and entertainment services, which are incubating today in Japan's sophisticated consumer market. ``We're excited because we get on the worldwide standard,'' says Chakrin. In short, for AT&T, the DoCoMo money truck couldn't have rolled up at a better time. By Roger O. Crockett in Chicago, with Irene M. Kunii in Tokyo Copyright 2000 The McGraw-Hill Companies, Inc. All rights reserved. Any use is subject to (1) terms and conditions of this service and (2) rules stated under ``Read This First'' in the ``About Business Week'' area. 12/1/00 12:15 PM