Tag Archives: qcom

Verizon, Vodafone, China Mobile Surface in Different 5G Camps

Will Verizon Communications ( VZ ) and Vodafone Group, one-time partners, be on different sides in the 5G wireless standards debate? Next-generation 5G services were a hot topic at last week’s Mobile World Congress in Barcelona, Spain. Vodafone ( VOD ) surfaced as a surprise member of a group of wireless phone companies aiming to meld two variants of LTE (long-term evolution) technology as a path to 5G. Those companies include China Mobile ( CHL ), India’s Bharti Airtel, South Korea’s KT ( KT ), Japan’s SoftBank ( SFTBY ) and Vodafone. SoftBank controls U.S.-based Sprint ( S ). Verizon, on the other hand, said at the MWC that it will cooperate with Japan’s NTT Docomo ( DCM ), KT and SK Telecom on possibly different  5G specifications . Verizon in early 2014 bought out Vodafone’s 45% stake in their U.S. wireless joint venture, Verizon Wireless, for $130 billion. Two variants of LTE have existed in 4G networks worldwide. China Mobile, with the government’s backing, developed the “TD” variant, which stands for “time division” communications. Most of the world, including Verizon and Vodafone, used “FD,” or “frequency division” communications, in their networks, constructed starting in 2008. U.S. chipmaker Qualcomm ( QCOM ) has intellectual property tied to the “FD” LTE variant. China’s government, meanwhile, has been keen on harmonizing the TD and FD variants, aiming to help companies such as Huawei sell network equipment and mobile phones abroad. In India and China, mobile phone makers have sold 4G devices that support multiple transmission modes. India’s biggest wireless firm, Bharti Airtel, and Japan’s SoftBank were earlier adopters of TD-LTE. Vodafone, meanwhile, has been working with Sweden-based telecom gear maker  Ericsson ( ERIC ) and Huawei in some countries to meld the FD and TD technologies. At MWC, the five wireless firms — China Mobile, Vodafone, Bharti, KT and SoftBank — said they would support a five-year strategic plan to build a 5G “ecosystem” and converge the TD and FD technologies. Verizon, NTT and their partners, meanwhile, set technical trials for 2016 through 2018. Verizon’s 5G partners include Alcatel-Lucent ( ALU ), Ericsson, Cisco Systems ( CSCO ), Nokia ( NOK ), Qualcomm and Samsung.

Ruckus Bulls Expect Upside From Cable Wi-Fi, OpenG Initiative

Ruckus Wireless ( RKUS ) could get a boost from increased spending on public Wi-Fi networks by cable TV companies as well as its push into a new market — LTE wireless data services that use high-frequency 3.5 GHz spectrum, say analysts. Ruckus, a maker of Wi-Fi networking gear, competes with Cisco Systems ( CSCO ), Hewlett Packard Enterprise ( HPE ), Aerohive Networks ( HIVE ) and others. Ruckus stock was up a fraction in midday trading on the stock market today , near 9.75, but it’s down 9% this year after falling nearly 11% last year, amid a slowdown in education spending on wireless networks. Ruckus has a IBD Composite Rating of 70, where 99 is highest. Ruckus stock touched an all-time low of 7.25 on Feb. 10. On Friday, BTIG analyst Walt Piecyk initiated coverage on Ruckus with a buy rating. “We expect Ruckus to generate 16% revenue growth in 2016, an acceleration from last year’s 14% growth rate,” wrote Piecyk. “We expect 2017 revenue growth of 16% but note that if a cable operator were to initiate a new investment program, Ruckus would have the opportunity to accelerate the top line.” Ruckus sells Wi-Fi gear to the enterprise market — big corporate, government, education and health system customers. One concern among analysts is its exposure to China’s telecom market. In late 2017, Ruckus could get a lift from a new product cycle, says Jason Ader, an analyst at William Blair. Ruckus is targeting in-building wireless networks that use 3.5 GHz spectrum, using a technology called OpenG. Ruckus is working on OpenG with Qualcomm ( QCOM ), Nokia ( NOK ) and Alphabet ’s ( GOOGL ) Google. “Ruckus management is confident in driving adoption of OpenG over time and expects revenue impact in the second half of 2017,” wrote Ader in a research report. “We view the in-building cellular opportunity as an excellent strategic fit with Ruckus’ existing business and a material growth catalyst longer term, especially as the Wi-Fi market matures.”

Does Tsinghua’s Western Digital Exit Threaten A Micron-China Tie?

Regulators’ decision to investigate Tsinghua Holdings’ now-defunct $3.8 billion investment in Western Digital ( WDC ) could signal “a heightened sense of scrutiny on all Chinese investments in U.S. technology,” a Macquarie analyst wrote Tuesday. That’s sure to frustrate Micron Technologies ( MU ) which, analysts say, could be examining a joint venture with a Chinese partner. Last year, Micron reportedly rebuffed a $23 billion bid from Tsinghua Holdings’ chip-arm, Tsinghua Unigroup. MKM analyst Ian Ing says Micron could seek to become a “ local supplier ” for the Chinese memory market by entering a JV. A JV stands a better chance of getting approval from the Committee on Foreign Investment in the United States. But the CFIUS is increasingly wary of Chinese investments in U.S. technology, Macquarie analyst Deepon Nag wrote in a research report. Tsinghua Unigroup plans to invest $47 billion to oust Apple ( AAPL )-supplier Qualcomm ( QCOM ) from its No. 3 chipmaking slot. “We see increased risk that Chinese investment in U.S. semiconductor assets won’t be allowed to take place, which we believe is an incremental negative for Micron,” Nag wrote. Unisplendour Playing For SanDisk? Early Tuesday, Tsinghua Holdings subsidiary Unisplendour pulled its $3.8 billion funding in Western Digital after CFIUS regulators decided to investigate the investment. Nag sees little chance of IP theft in such a “passive investment,” but other analysts have suggested that Unisplendour was making a play for SanDisk ‘s ( SNDK ) coveted Nand technology. Western Digital announced its plan to acquire SanDisk a month before Unisplendour was to invest the $3.8 billion for a 15% stake in Western Digital. “Tsinghua put $3.8 billion in Western Digital so they would have SanDisk technology,” Summit Research analyst Srini Sundararajan told IBD in December. On Wednesday, Sundararajan said the Western Digital-SanDisk deal would proceed without Unisplendour. It’s a marriage of “necessity and convenience,” he wrote in a report. Western Digital investor Alken Asset Management opposes the transaction , claiming the price is too high and SanDisk faces an uphill Nand battle, but the objection “comes a bit late.” Toshiba and SanDisk have made rapid progress in 3D Nand, Sundararajan says. And SanDisk has “gobs of Nand IP” plus licensing sales to justify the price. Western Digital cut the price Tuesday after Unisplendour’s exit to about $78.50 per share. Shareholders are set to vote on the transaction March 15. If it fails, Western Digital will have to pay a $184 million fee. “We find that net-net most of the objections expressed by Alken, while legitimate, ignore the strategic importance to Western Digital of having a captive Nand source as well as in-house Nand IP and a well-trained group of Nand experts,” Sundararajan wrote. Will Western Digital Cut Its SanDisk Bid? But Nag says the Unisplendour exit gives Western Digital the opportunity to reduce or completely drop the SanDisk deal. Out of 280 tech M&A deals in the past 30 years, nearly 10% were ultimately revised downward, he wrote. And considering Western Digital’s slough in stock price — down 43.5% since the deal was announced — the acquisition will likely be dilutive, Nag wrote. On Tuesday, RBC Capital Markets analyst Amit Daryanani estimated that the transaction would be 34% dilutive without the Unisplendour investment. “As a result, we believe that Western Digital will be highly motivated to renegotiate the price of SanDisk lower,” Nag wrote. On the stock market today , SanDisk stock rebounded 4.9% to close at 69.90, after closing down 1.6% on Tuesday. Western Digital stock rose 2.7% vs. a 7.2% decline Tuesday.