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To: Maurice Winn who wrote (24816)	3/24/1999 7:05:00 AM
From: Jon Koplik	Read Replies (2) \| Respond to of 152472

To all: Story re: China biz.yahoo.com Wednesday March 24, 5:42 am Eastern Time European mobile firms face new challenge in China By Matt Pottinger BEIJING, March 24 (Reuters) - After storming to a commanding lead in China, European mobile phone companies like Ericsson and Nokia could face a tough challenge if China follows through with plans to open the door wide to U.S. cellular technology. Nokia and Ericsson , however, do not appear unduly concerned, and analysts said it would take time for CDMA technology to prove itself in the market. In a sudden shift, China has signalled it will allow Chinese telecommunications firms to build CDMA (Code Division Multiple Access) networks, industry players said. The U.S.-developed technology is now limited to trials in four cities. China's market for mobile network equipment and handsets, worth billions of dollars annually, has been dominated by GSM (Global System for Mobile Communications) technology from Finland's Nokia and Sweden's Ericsson. Beijing now appears ready to back its small telecommunications firm, China Unicom, to build CDMA networks to compete with the state-owned virtual monopoly China Telecom, Unicom officials and foreign executives said. ''It's not good news, of course, if it happens,'' said Ericsson senior vice-president Jan Malm in Beijing. Andrew Page, head of Nokia's corporate planning in China declined to comment on the impact of such a shift. ''It's still speculation. We can't really comment about that until there's some form of government announcement,'' he said. Neither of the Nordic companies make CDMA network equipment although Nokia does make CDMA handsets for the U.S. market. The stakes in the Chinese market are huge. In 1998, China overtook the United States as Ericsson's largest market, with more than $2.8 billion in sales. For Nokia, China last year represented its second largest market, with 13 percent of total sales, or $2 billion. China has more than 23 million mobile phone subscribers, and the Ministry of Information Industry projects nearly 40 million by the end of the year. In a recent interview, before China's apparent policy shift, Page said: ''We have global growth targets of 25 to 35 percent and we have similiar targets for China as well,'' in 1999. Companies that would benefit from the expansion of CDMA include U.S. equipment suppliers Motorola (NYSE:MOT - news), Lucent Technologies (NYSE:LU - news) as well as Qualcomm Inc (Nasdaq:QCOM - news), which stands to earn hefty royalties on the technology. Canada's Nortel (Toronto:NTL.TO - news) and South Korea's Samsung [SAGR.CN] are also CDMA equipment providers and are likely to benefit. They argue the technology makes more efficient use of scarce airwaves than GSM and has superior voice quality. But Ericsson and industry analysts said CDMA could have a difficult time cracking China's market, even if it is given Beijing's official blessing. ''It looks very late to introduce a new standard,'' said Ericsson's Malm. Even under an aggressive expansion plan, he said it could take years for CDMA networks to become as ubiquitous as GSM, which is more attractive to consumers who want the ability to use their telephones in other cities. ''We have a very strong case with GSM. We think we will be able to compete,'' he said. Duncan Clark, a partner at telecom consultancy BDA Associates in China, called Unicom's plans to gain two million CDMA subscribers this year ''crazy.'' ''Where are they going to get the expertise and the people to deploy it?'' he asked, citing the time and capital needed to order, install and perfect the networks. ''Commercially, I don't see the value in it,'' he said. Its real worth is as a political gift from Premier Zhu Rongji to Washington, which is fuming over a $57 billion trade deficit with China last year. Zhu, who is said to back the CDMA plan, is due to travel to the United States in April. ''It's a box with lots of wrapping paper, but you open it up and nothing's inside,'' Clark said. Copyright © 1999 Reuters Limited. All rights reserved.

To: Maurice Winn who wrote (24816)	3/24/1999 8:07:00 PM
From: DaveMG	Read Replies (5) \| Respond to of 152472

Mq...juicy grits for the mill.... cbs.marketwatch.com Ericsson shares fall amid outlook, job cuts Analysts less-than-enthusiastic with new products By Janet Haney, CBS MarketWatch Last Update: 4:23 PM ET Mar 24, 1999 Movers & Shakers Earnings Surprises STOCKHOLM, Sweden (CBS.MW) -- Ericsson stock fell Wednesday after the mobile phone maker said it expects a tough first quarter and will trim 11 percent of its staff. Ericsson's (ERICY) U.S.-listed shares slipped 1 1/2, or 6.6 percent, to 21 1/16. In a conference call Tuesday, Ericsson said it plans to cut staff by 11,600, about 11 percent of its worldwide work force, over the next two years. See Ericsson conference transcript. "I must admit that the change and shift in technology is proceeding faster than has ever been experienced in any industry," Chief Executive Officer Sven-Christer Nilsson said during the conference call. Nilsson said Ericsson is moving toward becoming a "pure knowledge company, from being a mainly manufacturing company." Morgan Stanley lowered its outlook from "neutral" to "underperform," and also lowered its outlook on first quarter sales growth from 6 percent to 2.1 percent. Morgan Stanley also said it's "underwhelmed" by Ericsson's new products for 1999. Analysts at CIBC cut their first-quarter estimate from 11 cents to 7 cents a share. The 1999 estimate on Ericsson was cut from 86 cents to 75 cents a share. CIBC said Ericsson blames its revised first-quarter views on pricing pressure in the handset market, as well as restructuring costs. CIBC Oppenheimer kept its rating on the Stockholm-based company at "hold." CIBC said Ericsson's "introduction of uninspiring new phones" may be cause for investors to re-evaluate the company. Donaldson, Lufkin & Jenrette maintained its "market perform" rating and said its 12-month target for Ericsson is $25. Its first quarter calculation is 9 cents a share. PaineWebber said it's all "much ado about nothing" and kept its "attractive" rating on the company. cbs.marketwatch.com