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Thursday, September 21, 2006

A Proxy For WiMax? (INTC)(QCOM)(S)(MOT)(AMD)

There are no pure-play stocks in the battle for the next generation of cell broadband service. Sprint has chosen WiMax and the technology is in trial in places like South Africa. Qualcomm, which has dominated the chip technology for cell phones with its CDMA-based technology, now faces the most significant threat to its technology since the company was founded.

Qualcomm’s stock has risen from just over $10 in mid-2002 to $53 earlier this year. But, since then the stock has dropped to $38. The company’s growth has been impressive. Revenue from fiscal year 2003 (September fiscal) was less than $4 billion. For fiscal 2005, that number rose to nearly $5.7 billion.

Intel has taken its lumps recently. The market for PC and server chip sales is not only slowing. It is also facing pricing and performance competition from former also-ran AMD.

But, Intel may have found another large market to conquer. WiMax is being driven by technology from the big chip company along with partners Motorola and Samsung. If the technology continues to take share from Qualcomm, Intel is the most likely significant winner.

And, the stock market seems to be voting that way. Even after a year in which Intel has had a lackluster financial performance, its stock has markedly outperformed Qualcomm’s. Over the last six months Intel’s shares are flat while Qualcomm’s are down nearly 30%. Maybe the market is making a bet on the new technology.

WiMax, here we come.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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