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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (9687)	3/6/2001 9:26:19 AM
From: 49thMIMOMander	Read Replies (1) \| Respond to of 34857

OT: Correct, White was the other one. All while older bundled geniuses are unbundling to realities, even cloning doesn't work too well, father-son relations are truly complex, not to forget mother-son if the first one really goes wrong. Big Motorola client on the line $3-bil. Nextel account threatened March 05, 2001 By Sandra Jones Already struggling to stabilize a plummeting cell phone business, electronics giant Motorola Inc. now faces a threat to its role as sole supplier to Nextel Communications Inc. — a long-standing customer worth an estimated $3 billion annually, or 8% of Motorola's sales. The nationwide wireless phone company, which Schaumburg-based Motorola helped to build, is testing an alternative technology for its phones that could open the door for other vendors to supply it with handsets and infrastructure equipment — currently the exclusive domain of Motorola. Nextel says it will make a decision in the second half of the year. If it decides to switch to the more widely used technology, as many industry observers expect, Motorola will have to compete for Nextel's business with the same rivals that have been trouncing it in other markets — Nokia Oyj, Siemens AG and Nortel Networks Inc., to name a few. "Motorola has always had a unique relationship with Nextel, and now, Nextel would be just like any other operator," says Elliott Hamilton, director of global wireless at Strategis Group, a Washington, D.C.-based technology research firm. Motorola helped launch the fledgling company in the mid-1990s by creating a wireless phone that works as a two-day dispatcher and a regular cell phone. The specialized cell phones — based on Motorola's integrated digital enhanced network (IDEN) — became popular with business customers who wanted to keep a small group of co-workers accessible on one private channel, but still make outside calls. Running out of capacity Telecom pioneer Craig McCaw, who has close ties to Motorola and the Galvin family that runs it, invested $1 billion to boost Reston, Va.-based Nextel onto the national market while Motorola licensed radio spectrum to Nextel. Both own stakes in the company: 14% for Motorola and 13% for Mr. McCaw. But now, Nextel is running out of capacity on its Motorola-built network. It wants to find a technology that will support more users so it can grow with the rest of the industry. Nextel has about 6% of the cell phone market, or about 6.5 million users, and wants to double the number of subscribers in the next five years, analysts say. Some wonder whether the Nextel threat is just a plea for more attention from Motorola, which has been focused on fixing problems in its cell phone and semiconductor business and may have taken for granted an exclusive customer that produces fat profit margins on $3 billion in annual sales, according to industry estimates. Analyst Charles DiSanza at Gerard Klauer Mattison in New York figures the business yields 15% profits, much higher than the margins on most of Motorola's wireless equipment. "This could be a way for Nextel to hold the hammer over Motorola's head and make them pay attention," says Mr. Di-Sanza, who follows both companies. Still, the logic of a switch from IDEN — available only from Motorola — to the more standard code division multiple access (CDMA) technology is clear. Nextel could get better pricing by forcing the many CDMA equipment suppliers to bid for its business, and could offer its customers a broader choice of handsets. "There's nothing wrong with Motorola handsets, but when that's all you have to offer people, it gets boring," says Jane Zweig, CEO of Herschel Shosteck Associates, a Wheaton, Md.-based telecommunications research firm. At stake is an account worth about $3 billion to Motorola last year. Nextel and affiliates reported capital spending of about $4 billion in 2000, at least half of it for Motorola network equipment. Analysts estimate Nextel paid Motorola another $1 billion for handsets. Motorola declined to comment for this story. Motorola could bid Motorola will supply IDEN phones for some time even if Nextel begins purchasing equipment from other vendors. And Motorola will be able to bid for contracts using the new technology, a next-generation version of CDMA that it also produces. Motorola supplied the equipment for Nextel's test. But if Motorola's track record in traditional cell phones is any indication, it could be a tough battle. Finland's Nokia toppled Motorola for the No. 1 spot among cell phone makers in 1998, and has been taking away marketshare ever since. Motorola had 13.3% of the worldwide handset market in the third quarter of 2000, compared with Nokia's 30.6%, according to Gartner Group's Dataquest.