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To: Dealer who wrote (49044)	3/27/2002 1:09:11 PM
From: Dealer	Read Replies (1) \| Respond to of 65232

Qualcomm shares down on China Unicom spending cut LOS ANGELES, March 27 (Reuters) - Shares in wireless technology provider Qualcomm Inc. (NasdaqNM:QCOM - news) fell on Wednesday after a major customer, Chinese wireless carrier China Unicom, said it would cut capital spending this year in the face of slow adoption of its new network. ADVERTISEMENT Qualcomm shares were down 4 percent at $38.27 in midday trade on Nasdaq, and were among the most active shares on the exchange. On Wednesday, China Unicom Ltd , one of China's two major cell phone giants, reported a 38 percent increase in its 2001 net profit but said it would decrease capital expenditures by more than 30 percent in 2002 over 2001. Unicom's parent has a cellular network based on the globally popular GSM standard, but last year built a parallel, nationwide $2.9 billion network based on Qualcomm's Code Division Multiple Access (CDMA) standard, which is most popular in the United States. Qualcomm has said repeatedly over the last year that growth in China would be an important part of its overall growth as a company in the coming years. However, progress on adding new customers has been slow by Unicom's own admission, with only 9,000 new customers added in February in the provinces in which it had activated the new network and estimates of less than 500,000 total to date. The company's smaller network expansion plans are a bad sign for subscriber additions, one analyst said. ``We view this change as implying weaker subscriber adds and handset sales, which are in line with our below-guidance expectations for (four million) units,'' Credit Suisse First Boston analyst Tim Long said in a note to clients. Long also said the 30 percent drop in capital expenditures is far worse than his expectation of a 12 percent cut. Unicom has said it expects seven million subscribers this year, though brokerage Merrill Lynch cut its estimate to three million in early March after conversations with the company and its handset suppliers. Handset shortages and the high cost for the phones has been blamed in part for the slow rollout. Unicom said earlier this month it would buy 500,000 phones directly from vendors. At an event in Beijing in March, Qualcomm Executive Vice President Paul Jacobs told reporters he thought some vendors may have delayed production while waiting to see if the launch went smoothly. ``The company (Unicom) will add capacity only by upgrading its network to a faster version of CDMA standard, the CDMA2000-1x (standard), which Korea adopted last year,'' Bear Stearns said in a note to clients on Wednesday.