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Qualcomm slammed by Korea reports

Stock in the once high-flying wireless technology company tumbles amid uncertainty about the company's future prospects in the massive Korean market.

Stock in Qualcomm tumbled today amid uncertainty about the company's future prospects in the massive Korean market.

According to reports, a decision by Korean mobile carriers to use technology other than Qualcomm's code division multiple access (CDMA) could adversely affect the company's bottom line.

Qualcomm shares slipped more than 8 percent to finish at $56.63. The stock has traded as high as $200 and as low as $33.94 in the past year.

Major Korean carriers KT Freetel and SK Telecom may select W-CDMA, a similar standard supported by Nokia and Ericsson, over CDMA 2000, according to reports. Both technologies are known as third generation wireless technologies, or "3G," and are capable of delivering voice and Net access at high speeds.

But analysts and company representatives refute speculation that Korean carriers will embrace W-CDMA over CDMA 2000. Regardless, both technologies are based on CDMA patents, which will net Qualcomm significant royalty fee income, they say, though the company's chip sales business could be impacted if W-CDMA was selected over CDMA 2000.

Korea is one of the world's largest markets for CDMA-based wireless communications.

"While there appears to be no confirmation of these technology choices from either the operators or the Korean government, we recognize that this uncertainty may put pressure on Qualcomm's shares," Lehman Brothers equity analyst Tim Luke said in a research report today.

"We do not expect formal confirmation of these choices in Korea until early next week. However, we highlight Qualcomm clearly stands to benefit from the rollout of any CDMA-related technology."

Other analysts agree the Korean choice will be a boon to Qualcomm, regardless of which type is most widely supported.

"We forecast Qualcomm will receive 4.5 percent royalty for the deployment of third-generation technology products whether the technology used is W-CDMA, CDMA 2000 or other forms of CDMA," PaineWebber analyst Walter Piecyk wrote in a similar report today.

Qualcomm expects Korean telecommunications firms to embrace and support both W-CDMA and CDMA 2000, though nothing conclusive was determined today, according to spokeswoman Christine Trimble.

"We do not believe any official technology decisions see story: Qualcomm stumbles about 3G wireless have been made in Korea," Trimble said.

One of the best-performing stocks last year, Qualcomm shares have slipped in recent months. Adverse news from Asia pounded Qualcomm's stock recently after questions arose about whether Chinese carriers would use CDMA.

Analysts also were concerned about demand in Korea after the government recently ended handset subsidies, which could raise phone prices in the region.