Qualcomm-Alcatel joint venture will benefit investors - analysts
Qualcomm recently announced that it would invest in Alcatel-Lucent, a French telecommunications equipment corporation. Venture capitalists on both sides approved of the idea since both Qualcomm and Alcatel stocks gained following the announcement. Concerns regarding the partnership emerged but analysts said that Qualcomm made a good move by investing in the French firm.
The two corporations agreed to combine US$132 million worth of funds for research and development regarding small-cell technology. Small-cell technology could increase wireless data abilities in high-traffic place like malls, college campuses and heavily populated streets in a City.
Qualcomm's stake in the enterprise was estimated to be below 5%. This implied that the investors should not be very concerned that Qualcomm would be hurt by Alcatel's present weak performance. Alcatel said it lost US$1.7 billion during the second quarter which resulted to the company's reorganization.
Ian Ing, Lazard's analyst, said that the partnership would bring US$0.08 to US$0.29 earnings for each share for Qualcomm's investors. He added that the joint venture would allow Qualcomm to gain more.
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