Qualcomm inks new CDMA deal, stock continues slide

Jan. 2, 2002 4:43 p.m. PT

2 min read

Qualcomm Inc. (Nasdaq: QCOM) was down as much as 11 percent Monday morning on news China Unicom would not be using its wireless technology. The company did ink a deal with Garmin Corp.

Shares in the wireless communications company were down 4 11/16 to 68 after the company said it has entered into license agreement with Garmin Corp., a developer and maker of global positioning system equipment, which has agreed to use its code division multiple access (CDMA) technology.

Under the terms of the agreement, Garmin will get a royalty-bearing license under Qualcomm's CDMA technology and patents, and position location patents belonging to Qualcomm's unit SnapTrack to develop, manufacture and sell subscriber products for CDMA and High Data Rate wireless applications.

Financial terms of the deal were not disclosed.

The news wasn't enough to counteract the pull of Sunday's news. China Daily Business Weekly reported that China Unicom, one of the country's largest telecommunications carriers, cancelled a project using Qualcomm's CDMA technology.

Qualcomm's stock took an 8 percent dip last week on reports that China Unicom wouldn't use the technology, and then revived later in the week when Unicom officials suggested they might still build a CDMA network capable of serving 10 million subscribers by the end of this year.

Sunday's report said that agreement "could be cancelled," but Qualcomm would benefit from Unicom's use of more advanced CDMA technology in the future. Qualcomm signed a royalty agreement with Unicom in February.

Unicom will use third-generation CDMA, which is likely to become widely commercially available in 2003, the newspaper said. It gave no specific timetable for the new project.

Industry analysts have said it made little sense for Unicom to deploy a second-generation CDMA network to compete with its GSM business -- especially with 2.5 and 3G coming soon. Generation 2.5 CDMA allows for higher-speed data transfer, while 3G will be capable of broadband multimedia applications.