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

To: CDMQ who wrote (21424)	1/16/1999 9:57:00 AM
From: CDMQ	Read Replies (1) \| Respond to of 152472

Here's the article. Wow, who knew what when? Qualcomm seeks mate for ailing unit By Mike Drummond STAFF WRITER January 16, 1999 Qualcomm has been trawling for potential partners to help its ailing infrastructure division, which by some estimates has been bleeding $100 million a quarter. The division makes base stations -- closet-sized equipment that keeps phone handsets connected to central communications networks. Rumors have swirled for months that Qualcomm was looking to enter into a partnership or even sell the division, analysts say. The talk is getting louder. "It seems there's a heightening of the buzz," said Pete Peterson, an analyst with Volpe Brown Whelan. Qualcomm officials denied that the division is up for sale, but conceded that it has explored entering a partnership. "We've looked at many different options, including partnering," said Julie Cunningham, Qualcomm's vice president of investor relations. "There are a lot of options, but none of them are for a sale." The troubled division needs to make about $200 million to break even for the quarter ended Dec. 31, said Michael Ching, analyst with Merrill Lynch Global Securities. However, Ching estimated that the division will make just $102 million for the quarter. "It's underperforming," Ching said of the infrastructure division. "I would expect Qualcomm executives to consider all options, including potentially selling it." Various analysts blamed high-cost of entry and troubled international markets, particularly in Russia, for the division's financial woes. For the division to break even for the entire year, Cunningham said, it would have to make between $800 million and $1 billion. "Clearly, we're not there yet," she said, declining to elaborate. Despite the division's poor performance, Cunningham said it was "an important business to be in." Various analysts cite a list of potential partners, including Lucent Technologies, Motorola, Nortel, Siemens, Alcatel and even Qualcomm archrival Ericsson. Several of those companies contacted declined to confirm or deny that they would be interested in acquiring a part or all of Qualcomm's infrastructure division. Ericsson and Qualcomm are battling over who will set the international standard for the next generation of phones that will accommodate voice and a raft of digital capabilities, including e-mail, paging and large data downloads. Qualcomm is pushing for a new standard, called CDMA 2000, that would work with its existing phone technology. Ericsson is pushing its own similar brand of CDMA that is incompatible with Qualcomm's legacy technology. Neither company wants to yield to the other's technology and waste research-and-development money. Both are trying to use the new technology to grapple over market share in the United States, Europe and Asia. One analyst who declined to be named said a senior manager at Ericsson discussed that company's interest in buying Qualcomm for its CDMA. "I know Ericsson has entertained the idea of a Qualcomm acquisition," the analyst said. Peterson said Alcatel and Siemens both would make suitable partners with Qualcomm's infrastructure division because both need a CDMA presence. Motorola is coming off a strong quarter and could be in the mood to buy. Nortel, meanwhile, uses similar designs for its base stations, thus would make an easy fit, Peterson added. During a recent conference call, Qualcomm executives reportedly told analysts that the company was evaluating its infrastructure division. "At some price, Qualcomm's infrastructure (division) would be attractive to a number of buyers," said Mark Roberts, an analyst with Everen Securities. Qualcomm makes phones, base stations and ASIC communications chips. It also makes Eudora e-mail software and Omnitracs, a satellite locator service that keeps track of commercial trucks. The company also is involved in Globalstar, a satellite wireless phone venture that will compete with Iridium.