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Tuesday, October 10, 2006

Cell Phone Nation:Will A Global Slowdown Gore Motorola and Qualcomm?

Stocks: (NOK)(MOT)(QCOM)(TXN)

With Nokia about to reports its quarter, there is concern among analysts that cell phone unit growth could fall by half in 2007 compared to the current year.

Christmas sales may be it, at least for awhile.

If Nokia reports good figures but comments that next year will be slow, watch out below for the share prices of Motorola, Samsung, Qualcomm and perhaps even Texas Instrument. All rely heavily on the cell phone market for their next meal.

Qualcomm is already acting like it is in the midst of a bad market, but it may be Wall St. anticipating the worst. The company is also dogged by concerns that WiMax will cut into its core IP licensing. The stock traded near $53 as recently as May. A good day for the stock is $35 now.

Texas Instruments has a broad enough portfolio of chips outside the cell market that a downturn may hurt the company's financials, but not as much as it could Nokia or Ericsson. TI's stock has been on a circus ride. It went over $35 in May, then dropped to $27 in July. Shares recovered to $34 in September and now sit at $31. The market must be waiting for a sign. The stock has no clear direction, but a drop-off in cell phone units is not going to help it.

Motorola has been a market darling. Its stock has run from $19 in July to over $25 recently. Sales of its RAZR phone passed 50 million units worldwide in July. That may argue that Motorola has further to fall if there is a sharp deceleration in cell unit growth.

If the forecasts ahead of Nokia's earnings are true, no one is going to get out unscathed.

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

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