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Follow-up on NEC Telecom (China) and CNTF
Nov 17 11:05 am
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All Comments by timezero »China Techfaith Wireless Beats By $0.04; Guides Above Consensus; Stock Up 12% in After-Hours Trading (CNTF 3Q05 Earnings) [View article]
Puzzled by the fact that NEC models suck in China (a cold hard fact, at least according to MII and China's Consumer Association) and CNTF takes care of most of its design work anyway (proved by the joint venture), I dig deeper into the issue and found some interesting information.
According to a recent interview of NEC Telecom (China)'s CEO with Sina (you can get it on many web sources), the joint venture takes care of 70% of the design work for NEC globally including 3G. Basically, all the orders except those from Japan are now being designed by the joint venture. Congratulate to all the longs on CNTF: you can have an assurance on CNTF's future revenue. But, do you know why NEC Telecom (China) sticks with CNTF and ask the headquarter to move those work to China?
The CEO of NEC Telecom (China) was the general manager of Motorola (China). He become the CEO of NEC Telecom (China) in may 2004. Later that year, the joint venture was established. Remember CNTF was led by a bunch of Motorola guys? That may explain why NEC models designed by CNTF suck in China but CNTF still get orders. And, it also explains why it takes much longer time for CNTF to crack the nuts to get order from the top 6 vendors. If NEC Telecom (China)'s CEO does not come from Motorola thus having no tie with CNTF's leadership, will CNTF still get order from NEC? You tell.
Anyway, Mr. Lei Lu, the CEO of NEC Telecom (China) really helped a lot on CNTF's business. I am not an expert on plot-making. But, with a strong partnership producing underperforming models, everybody would ask why. I found the answer lies in the special relationship between some former motorola employees.
Maybe the big drop in stock price was for someone who has made special contribution to the firm but the firm can not publicly issue shares to or grant options to. So, how about a big whack on the stock price so you can buy cheap. And, as long as there are olders pouring in, you are always the firm's God.