Wednesday, November 22, 2006

Calls of Note Part 1

- ThinkEquity notes that as they have pointed out numerous times that they believe 802.11 will experience a very high attach rate in cell phones for reasons of cost and indoor coverage.
Cost is the most important, as the firm believes a high percentage of cell phone calls are made where such traffic should rather be carried over unlicensed frequencies in smaller cells. Approximately one billion cell phones are sold per year, and they believe it reasonable to believe that half of the global cell phone sales could contain 802.11 chips within five years.

As such, they believe QUALCOMM (NASDAQ:QCOM) may want to upgrade its 802.11 silicon content from cooperation with Atheros to something internal. In English, that means making an acquisition. So what would QUALCOMM acquire to accomplish this goal?

ThinkEquity thinks privately held Airgo of Palo Alto is the prime candidate. Firm believes a QUALCOMM acquisition of an 802.11 asset would hold negative consequences for Atheros (NASDAQ:ATHR). It appears that if QUALCOMM acquired Airgo, it would then be a matter of time before Atheros ceased deriving the perception of future benefits from QUALCOMM's cooperation.

Having said that, the firm remains positive on Atheros' overall positioning and outlook and Reits Buy with a $30 tgt.

Notablecalls: Not actionable but good to know category.

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