ANALYSIS-Qualcomm shares may gain more from Nokia deal
[2008-7-28]
Tag : nokia cdma mobile
The end of a long dispute between Finland's Nokia (nyse: NOK - news - people ) and Qualcomm Inc (nasdaq: QCOM - news - people ) sets Qualcomm up as a key supplier of advanced wirelesstechnology and could boost its stock price another 30 percent,according to analysts.
These analysts say investors have yet to fully appreciate thelong-term benefits of the deal, which might even lead to a chipsupply deal between the two companies, even though financial termswere not disclosed and Qualcomm has already seen its shares rise 20percent in the last two days.
Even after Qualcomm's latest full-year financial forecast fellbelow Wall Street expectations, analysts raised their price targetson the stock this week, citing less legal risk, a possible chipdeal and prospects from future technologies.
Deutsche Bank (nyse: DB - news - people ) analyst Brian Modoff sees as crucial Nokia's plan to licenseQualcomm patents for emerging high-speed mobile phone technologies,such as Long-Term-Evolution, which many of the world's biggestoperators plan to use around 2010.
"This means that the world's largest handset vendor now seesQualcomm's patents as essential to (next generation) standards,"said Modoff, who raised his Qualcomm price target to $70 after theagreement.
Qualcomm closed at $44.82 Wednesday before the deal and was closedat $54.45 Friday.
Qualcomm and Nokia said Wednesday they had entered into a 15-yeartechnology license agreement as part of a settlement ending abitter three-year legal battle over wireless patents.
The concession by Nokia, which sells about 40 percent of mobilephones and a leading patent holder itself, that it needs Qualcommfor LTE, may mean other phone makers will have to follow.
"Qualcomm is a clean play on market growth regardless of who'swinning in handsets" now that it has a deal with Nokia, AmericanTechnology Research analyst Mark McKechnie said.
Growth prospects for the wireless market could be dampened by highworldwide penetration and a tough economy that could hurt demandfor more advanced phones with high-speed Web links andcomputer-like features.
The end of a long dispute between Finland's Nokia (nyse: NOK - news - people ) and Qualcomm Inc (nasdaq: QCOM - news - people ) sets Qualcomm up as a key supplier of advanced wirelesstechnology and could boost its stock price another 30 percent,according to analysts.
These analysts say investors have yet to fully appreciate thelong-term benefits of the deal, which might even lead to a chipsupply deal between the two companies, even though financial termswere not disclosed and Qualcomm has already seen its shares rise 20percent in the last two days.
Even after Qualcomm's latest full-year financial forecast fellbelow Wall Street expectations, analysts raised their price targetson the stock this week, citing less legal risk, a possible chipdeal and prospects from future technologies.
Deutsche Bank (nyse: DB - news - people ) analyst Brian Modoff sees as crucial Nokia's plan to licenseQualcomm patents for emerging high-speed mobile phone technologies,such as Long-Term-Evolution, which many of the world's biggestoperators plan to use around 2010.
"This means that the world's largest handset vendor now seesQualcomm's patents as essential to (next generation) standards,"said Modoff, who raised his Qualcomm price target to $70 after theagreement.
Qualcomm closed at $44.82 Wednesday before the deal and was closedat $54.45 Friday.
Qualcomm and Nokia said Wednesday they had entered into a 15-yeartechnology license agreement as part of a settlement ending abitter three-year legal battle over wireless patents.
The concession by Nokia, which sells about 40 percent of mobilephones and a leading patent holder itself, that it needs Qualcommfor LTE, may mean other phone makers will have to follow.
"Qualcomm is a clean play on market growth regardless of who'swinning in handsets" now that it has a deal with Nokia, AmericanTechnology Research analyst Mark McKechnie said.
Growth prospects for the wireless market could be dampened by highworldwide penetration and a tough economy that could hurt demandfor more advanced phones with high-speed Web links andcomputer-like features.
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