China TechFaith Scores on CDMA Pact (CNTF, QCOM, BRCM, NOK)

China Techfaith Wireless Communication Technology Ltd. (NASDAQ:CNTF) is seeing shares up drastically in early pre-market trading. 

Qualcomm Inc. (Nasdaq: QCOM) has granted TechFaith Wireless Technology Group Limited, a British Virgin Islands corporation and wholly-owned subsidiary of CNTF, a global royalty-bearing license under Qualcomm’s patent portfolio to develop, manufacture and sell subscriber units and modem cards implementing the WCDMA and TD-SCDMA standards.

TechFaith is now licensed by Qualcomm for 3G subscriber units and modem cards that implement the CDMA2000®, WCDMA/UMTS and/or TD-SCDMA standards. The royalties payable by TechFaith are at Qualcomm’s standard worldwide rates and are the same irrespective of the CDMA standard implemented by the subscriber unit or modem card.

First Call shows that estimates are just over $143 million for all of 2007 and almost $219 million for all of 2008.  Shares are up roughly 50% at $10.00 compared to a $6.69 close on Friday; and the 52-week range is $4.01 to $11.28.  While this says "global" you have to always keep in mind the Broadcom (NASDAQ:BRCM) win over Qualcomm inside the U.S. as an issue, and you have to wonder how Nokia’s (NYSE:NOK) perpetual onslaught will affect the bullish bias in this deal as the European Union goes into mnore formal investigations against Qualcomm. 

CNTF did only have a $290 million market cap before this huge pop, so any real jump in orders might be a huge help.  TechFaith also has the China boost to it and it is no secret that it has been red hot lately.  So far that is what traders are betting on pre-market.

Jon C. Ogg
October 1, 2007