Qualcomm looks to sell handset business

Qualcomm Inc. developer of the popular
cell-phone technology, said it was in talks to sell its phone-making
business. Increasing competition, falling profit margins and drop in
handset prices have forced Qualcomm to consider selling its handset
business, suggesting the wireless industry is facing the same pricing
pressures as the personal computer market.

Qualcomm makes only about 10 million mobile phones per year, compared
with roughly 50 million for some larger vendors, according to analysts.
Accordingly the company cannot keep its costs in line with larger handset
makers such as Nokia, Ericsson, and Korean vendors including Samsung,
Hyundai, and Hitachi. "There's a lot of competition coming in from
South Korea and East Asian nations which is driving costs down," said
Strategy Analytics a wireless industry analyst Kelly Quinn.

Qualcomm's decision to explore its options is intended to focus the
company on more profitable businesses such as selling chipsets for its
code division multiple access (CDMA) mobile phone technology, which reaps
rewards through licensing arrangements. The company makes money by selling
mobile phone chips to other phone makers and by licensing its CDMA
technology to other chipmakers. Qualcomm already has sold its wireless
infrastructure business to Ericsson, and if the company sells its handset
business, the move could pay large dividends, analysts said.