Seeking Alpha

Richard Davenport's  Instablog

Richard Davenport
Send Message
Richard Davenport provides differentiated research utilizing supply chain analysis, as well as more traditional methods. He is a former sell-side analyst at Citigroup. In 2005 he founded Connexiti LLC, a market-leading provider of supply chain data, research, and analytics. While at Connexiti,... More
My blog:
  • ERIC : China 3G Contracts Support Thesis 0 comments
    Jul 9, 2009 11:38 AM | about stocks: ERIC, ADI, ALTR, ALU, VIEW, CTV, PMCS, PWAV, SMI, QRVO, TXN, XLNX

    EVENT $1B Contract With CHL; $700M Contract With CHU


    Upgrades To Both 2G And 3G Networks


    Positive For Names Exposed To China 3G Infrastructure Buildout


    Already Positive On 12 China 3G Names (3.3.09)


    5.6.09 Competitor CSCO guides FQ4 revs +2.2% above Street expectations

    5.19.09 Supplier ADI guides FQ3 revs +7.5% above Street expectations

    6.1.09 Supplier ALTR guides Q2 revs -0.5% below Street expectations

    6.11.09 Supplier QCOM guides FQ3 revs +7.1% above Street expectations

    6.11.09 Supplier NSM guides FQ1 revs +4.4% above Street expectations

    6.22.09 Supplier MRVL guides FQ2 revs +10.0% above Street expectations

    6.22.09 Supplier ISIL guides Q2 revs +0.7% above Street expectations

    6.23.09 Supplier JBL guides FQ4 revs -4.3% below Street expectations

    7.2.09 Supplier XLNX guides FQ1 revs -5.5% below Street expectations

    7.8.09 Company ERIC announces US$1.7B In China 2G and 3G infrastructure contracts

    EVENT: $1.7B IN CHINA CONTRACTS. Yesterday ERIC reported two separate contracts in China totalling $1.7B. The first, with CHL for $1.0B, is for both 2G and 3G network upgrades. The second, with CHU for $700M, will enable ERIC to be the main supplier to upgrade its GSM networks in 10 provinces, as well as improvements to its GSM/WCDMA core network in 15 provinces.



    Chinese service providers are expected to spend ~$58B in 3G infrastructure over the next three years, according to China’s Ministry of Industry and Information Technology. China Mobile (CHL; China’s largest wireless carrier with ~463.9M subscribers) is slated to add an additional 60K 3G base stations this year on top of the 20K it already has, rolling out its TD-SCDMA technology to 238 cities by year-end. China Unicom (CHU; ~134.2M subs) plans to roll out its WCDMA technology to 280 cities by year-end. China Telecom (CHA; ~28.9M subs) plans to roll out its CDMA2000 network to 100 cities by year-end.



    For more information, see our BizMaps at

    There has been much speculation about a "pause" in China 3G infrastructure spending. Suppliers have acknowledged that the buildout could be "lumpy," but as we mention above, we view this as a long-term (2-3 yr) trend. Last week, XLNX lowered its Jun-Q guidance; however, the cause was not a pause in China 3G spending, but rather capacity constraints at the 65nm node at UMC, its largest supplier, due to the strong demand. While some of the $1.7B in China contracts ERIC announced today is for 2G infrastructure (we have no way of knowing how much), that does not diminish the fact that China 3G spending is continuing. As a result, we reiterate our long position on US equities exposed to China 3G infrastructure, including ADI, ALTR, ALU, COGO, CTV, ERIC, PMCS, PWAV, SMI, TQNT, TXN, and


    Disclosure: No positions

    Themes: China 3G Stocks: ERIC, ADI, ALTR, ALU, VIEW, CTV, PMCS, PWAV, SMI, QRVO, TXN, XLNX
Back To Richard Davenport's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.