Shares of Qualcomm Inc. (Nasdaq: QCOM) surged in pre-session trading Monday on the news that the company has signed a memorandum of understanding with Chinese officials to deploy its CDMA technology in that country.
Qualcomm's shares rose over 7 percent, gaining 6.19 to 89.19.
According to Reuters, the Chinese Ministry of Information Industry and the wireless technology giant Qualcomm inked a memorandum of understanding, confirming a previous deal signed in back in January between Qualcomm and China's state-backed China Unicom.
The deal, which has been in the works for the last number of months, allows for the building of a nation-wide network on the mainland, employing Qualcomm's current generation CDMA mobile phone technology. China Unicom, the mainland's number-two wireless carrier, could begin awarding contracts in early 2001.
Qualcomm's CDMA technology format, which recently had its European patents upheld competes with more widely used European GSM standard.
According to Qualcomm CEO Irwin Jacob, while the ultimate size of the deal is up to China Unicom, discussions have put the network size at roughly 10 million-subscriber capacity for the first order. "I would expect probably something in that neighborhood," Reuters reported Jacob as saying.
Qualcomm also Monday received a boost from CS First Boston. In a research note, the company was given a "buy" rating, and put at a price target of $99. The note projects that Qualcomm is well positioned for the emergence of third generation (3G) wireless technology, with market opportunities expanding from 15 percnet to 90 percent of the addressable market by 2005.
Reuters contributed to this report.