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

To: carranza2 who wrote (9193)	3/28/2001 5:22:31 PM
From: Mike Torrence	Respond to of 196961

You haven't missed a thing. If it was only about economics and technology there wouldn't even be a discussion. We're seeing a weird variation of capitalism at work.

To: carranza2 who wrote (9193)	3/29/2001 2:27:31 AM
From: grinder965	Read Replies (1) \| Respond to of 196961

Well this could be the reason: Market Place: The Dispute Within the Verizon-Vodafone Dispute By ANDREW ROSS SORKIN March 29, 2001 A recent skirmish between Verizon and its wireless partner, Vodafone Group, over technological standards is really just a sideshow to a bigger battle: Vodafone wants to take control of Verizon's wireless unit, according to executives close to the company. When Verizon announced last week that it planned to employ a different standard than Vodafone for its next generation of high-speed networks, executives blanched at Vodafone's headquarters in Newbury, England. Their concern was not about customer difficulties. True, Vodafone customers would need special, expensive cellular telephones that have yet to be developed when traveling in the United States, as would Verizon customers traveling in Europe. But the problem was much worse: Vodafone's chairman, Chris Gent, had set his sights on taking over Verizon Wireless within nine months on the way to a seamless worldwide network, according to executives close to Vodafone. And he has no interest in owning a network that is not directly compatible with his. Vodafone already owns 45 percent of Verizon Wireless. In the wireless industry, scale is everything. Companies like Vodafone rely on price breaks by buying hundreds of thousands of the same thing. Cellular handsets, transmitters, cables, servers and software come at a discount only when bought in bulk. And Verizon's plan to use a standard called CDMA2000 instead of Vodafone's UMTS means those bulk discounts would be far smaller. An executive close to Vodafone even insisted that Verizon's intention to use an incompatible standard was meant to make it a less attractive takeover target to Vodafone. Though executives of the companies talk regularly — they are partners after all and Vodafone owns 45 percent of Verizon Wireless — Mr. Gent has yet to initiate takeover discussions, the executives said. But Mr. Gent and his team have begun laying the groundwork for such a move, the executives said, putting together books that demonstrate the strategic and economic reasons for such a deal. Now Verizon, the nation's largest wireless carrier, may be backing down from its plan to put in force the new technological standard. Vodafone said today that it was negotiating with Verizon over which standard would be used and Verizon said there was no riff between the two companies. Whatever the final choice, it will still take several years to roll out the new technology. For Vodafone, the world's largest wireless company, the idea of buying out its partners, even under hostile circumstances, is not new. Back in 1999 Vodafone acquired AirTouch, itself a minority shareholder in one of Vodafone's other partners, Mannesmann of Germany. When Mannesmann invaded Vodafone's home territory by announcing in 1999 that it would buy the British mobile phone network Orange for $33 billion, Mr. Gent decided that Vodafone had to take over its partner turned rival. He made a $183 billion hostile bid and won the company. Now he wants a larger piece of the American market. Vodafone is taking its time in part because it is still sorting out several acquisitions and its own financial condition. Vodafone participated in a bevy of costly auctions for wireless spectrum in Europe, taking on billions in unexpected debt. The company, like so many other telecommunication concerns, has suffered from a sagging stock price, a currency that Mr. Gent has used to buy out his rivals in the past. Buying the rest of Verizon Wireless should not be hard. For control, Vodafone needs only an additional 6 percent stake in the unit, which pulled the plug on an initial public offering last year because of the stormy conditions on Wall Street. It is unclear how much Verizon Wireless would fetch in this volatile market. Yesterday, Verizon's shares fell $2.92, or 5.83 percent, to $47.19. Vodafone shares fell 9 pence, or 4.2 percent, to 204 pence. Whether Verizon would be willing to give up control of the wireless unit is unclear. When Verizon was created from the merger of Bell Atlantic and GTE, the company decided to create one brand for both its fixed line and wireless businesses. The wireless unit was created from the merger of Bell Atlantic, Vodafone AirTouch and GTE's wireless businesses. But Verizon could just as easily dump control of its wireless business to focus on its local and long-distance strategy and still keep a stake in the growing wireless company, analysts said. Last year, Verizon Wireless added 3.7 million customers, raising its total to 27.5 million, a 16 percent jump over its increase the year before nytimes.com