To: Racso who wrote (3062 ) 3/29/1999 1:01:00 AM From: Rusty Johnson Read Replies (1) | Respond to
Briefing.com ... Just one more word on why yesterday's deal with Qualcomm is so important: China. In a Reuters story today, an unnamed source stated that Qualcomm's CDMA unit, which was purchased by Ericsson in the deal announced yesterday, had started, and made good progress with, negotiations with China's Unicom on providing CDMA technology to the Chinese telecom company. Ericsson has a strong presence in China already, but based on a GSM technology standard. Last year Ericsson sold more than $2.8 billion in phones and infrastructure equipment in China, more than it sold in the US. If true that Qualcomm was making progress to closing a deal in China for CDMA technology, then Ericsson had to make yesterday's deal or suffer a huge blow in its biggest market. Qualcomm has apparently negotiated a good deal for itself with Ericsson. The Reuter's story claims that China's Unicom is planning a CDMA based network for 40 million users. Ericsson's deal with Qualcomm now makes Ericsson the potential winner in the Chinese market, although it will share the take with Qualcomm. The Chinese market is the single most important telecom market in the world, because there is no real existing telephone copper-wire infrastructure to compete with. China, although poor, has one-quarter of the world's population. When they eventually buy phones, many for the first time, they will go right to wireless. Yesterday's deal now makes it more likely that the first phone they own will be an Ericsson , and a royalty payment will go to Qualcomm for each one. CS First Boston reiterates "strong buy" rating on Swedish cell phone maker as acquisition of Qualcomm's infrastructure business is a net positive ; company will gain engineering talent and will have the opportunity to supply a greater portion of its customer's needs; has a price target of $35-$40 per share...
