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Openwave in China; flies past analyst expectations

The company, formerly known as Phone.com, partners with the largest wireless phone carrier in China, and beats analysts' expectations by 12 cents per share.

Openwave Systems, formerly known as Phone.com, has signed a technology deal with the largest wireless phone carrier in China, a potentially valuable foothold for the Silicon Valley company.

Openwave also reported second-quarter earnings of $15.8 million, or 9 cents a share, on second-quarter sales of $109.7 million Monday at the close of the market. A consensus of analysts from First Call had expected a 3 cents per share loss.

With a potential consumer base that far outstrips any country in the Western world, China has long been a coveted market for U.S. communications companies. Shifting regulatory sands and an immature consumer market have served to diminish corporate enthusiasm only minimally over the past few years.

China Mobile Communications Corporation (CMCC) will use Openwave's software to provide Net access over mobile phones to its subscribers, the companies said Monday. The carrier serves about 80 percent of China's rapidly growing mobile phone market, and says it has about 66 million subscribers as of the close of 2000.

The carrier adds to the long list of companies around the world that are using Openwave's technology to provide mobile phone Net access. Though powerful companies, including Nokia and Microsoft, produce competing products, most of the largest wireless telecommunications carriers in the world have said they will use Openwave's software.

The core software technology includes the Net browser on the cell phone itself, and the infrastructure software that lives inside a carrier's network and allows information to be sent to individual mobile phones.

The technology used inside this type of browser, called Wireless Access Protocol (WAP), has been subjected to considerable criticism from consumers and analysts who have said it is still difficult to understand and use.

On the earnings front, Openwave grew sales 36 percent sequentially, riding increased interest in use of the wireless Web. The company also upped its outlook for the 2001 calendar year by $60 million, saying it will collect $640 million in revenue and achieve 10 to 20 percent quarter-over-quarter growth.

"The wireless Internet continues to come of age and its worldwide adoption is fueling Openwave's growth," said Chief Executive Don Listwin.

In related wireless news out of China, infrastructure company Metawave Communications said it had completed a field trial of its "smart antennae" technology with China Unicom, the country's second-largest wireless carrier.

Metawave's technology is designed to improve the capacity and stability of wireless networks. A successful test in the Shanghai region means that the company will continue to work with Unicom, Metawave executives said.

Staff writer Ben Charny contributed to this report.