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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (11944)	7/1/1998 5:02:00 PM
From: JGoren	Respond to of 152472

Afternoon Press Release//Qualcomm Spinoff to Get $260 Mln in Credit Line, Cash San Diego, July 1 (Bloomberg) -- Qualcomm Inc., one of the largest makers of wireless phone equipment, said it will provide $10 million in cash and a $250 million credit line to a proposed spinoff of its investments in wireless-phone companies. Qualcomm said its shareholders will receive one share of common stock in the spinoff, known as SpinCo, for every four Qualcomm shares they own. Qualcomm will also retain a warrant to purchase about 18 percent of SpinCo shares on a fully diluted basis for as long as 10 years after the spinoff is completed. Qualcomm said the spinoff will help boost its earnings and stock price because investors will better value its outside investments as a separate company. Analysts agree and say the spinoff is needed to eliminate any conflict Qualcomm could have with its customers. The spinoff of operations which would have been dilutive to earnings makes is very positive,'' said Mark Roberts, an analyst at Everen Securities Inc., who has an ''outperform'' rating on Qualcomm's stock. ''It also takes Qualcomm out of a position of competing with its customers.'' Qualcomm shares fell 1/16 to 56 1/8. On May 27, Qualcomm first said it's considering combining most of its investments in wireless phone-service companies to a unit and then spinning off that unit to shareholders. Qualcomm has stakes in several wireless companies around the world. In exchange, the wireless companies agreed to buy Qualcomm's equipment based on its code-division multiple-access (CDMA) digital technology. Simplifying Accounting Accounting rules require Qualcomm to recognize a share of these companies' losses, and at the same time it's limited in recognizing revenue from equipment sales to them. Moving the investments to a separate company will eliminate that accounting problem, it said. In addition to the cash and credit line, Qualcomm said it intends to transfer to the spinoff certain notes convertible into equity stakes in some of the operating companies and certain other debt owed to Qualcomm. It will also continue to supply equipment to SpinCo's operating companies. SpinCo will own Qualcomm's joint-venture and equity interests in Pegaso SA de CV of Mexico, Metrosvyaz of Russia, Telesystems of Ukraine, ChileSat Telefonia Personal SA of Chile, Chase Telecommunications Inc. of the U.S., OzPhone Pty of Australia and certain other development-stage businesses. The proposed spinoff is subject to approval by Qualcomm's board. If approved, it is expected to be completed in September. As previously reported, Harvey White, who has been Qualcomm president since May 1992, will become SpinCo president, chief executive and chairman. Thomas Bernard, senior vice president and general manager of Qualcomm's infrastructure-products division since April 1996, will become executive vice president of SpinCo. Richard Sulpizio will become president of Qualcomm, replacing White, and will remain chief operating officer.