Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
HEARD ON THE STREET: How China's 3G Telecom Initiative Could Work Against Western Firms [Wall Street Journal]
Summary: The delayed but much anticipated rollout of 3G networks in China may not be as lucrative as initially thought for Western telecom-equipment co's and particularly not for American vendors. Beijing is expected to issue 3G licenses next year, but in the meantime, Chinese players such as Huawei Tech and ZTE have become more competitive and are seen as benefiting from the creation of a Chinese standard for 3G, TD-SCDMA, that would differ from those used in Europe and the U.S. Chinese carriers are actually against a national standard because it will limit their pool of equipment suppliers and since the TD-SCDMA is commercially unproven. At any rate, U.S. equipment manufacturers have already lost revenue from the 3G delay. And although there's urgency in China to have 3G ready for the 2008 Olympics, European vendors such as Siemens, Nokia and Alcatel are seen as being better positioned due to their JVs with Chinese partners.
Related links: Commentary: Booming Chinese Wireless Market Leaves Room for Two Players -- Barron's • Chinese Tech Stock Weekly Report • China's Optical Threat to U.S. Networking Companies • Nokia: Positive Outlook for China's 'Maturing and Emerging' Mobile Phone Market. Conference call transcripts: Motorola Q3'06, Lucent F4Q'06, Nortel Q3'06, Nokia Q3'06, Alcatel Q3'06.
Potentially impacted stocks and ETFs: Motorola (MOT), Lucent (LU), Nortel (NT), Ericsson (NASDAQ:ERIC), Siemens (SI), Nokia (NYSE:NOK), Alcatel (ALA), 3Com (COMS) • Chinese Wireless Stocks: China Mobile (NYSE:CHL), China Unicom(NYSE:CHU), China Techfaith Wireless Comm. (NASDAQ:CNTF) • ETFs: Broadband HOLDRs (NYSE:BDH), iShares Goldman Sachs Networking (NYSEARCA:IGN), Wireless HOLDRs (NYSEARCA:WMH)
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