Monday, February 4, 2002

News Wrap

Market foes compel Verizon to jump gun on 3G

By Taylor Lincoln

Last week's decision of Verizon Wireless to begin offering high-speed, wireless data service to its Northeast Corridor cellular customers caught some industry watchers off guard.

Christine Loredo, a senior analyst with the Washington, D.C., Strategis Group, said she expected Verizon to wait until its entire network was ready before flipping the switch on the service, called "3G" for third generation.

But, Loredo speculated, recent moves of AT&T Wireless and Cingular to enhance their networks (though not quite to 3G levels), pushed Verizon to act now - becoming the first U.S. carrier to break the 3G barrier.

Verizon Wireless, a Bedminster, N.J.-based joint venture between Vodafone Group of Britain and New York-based Verizon Communications, is the nation's largest wireless carrier and has offices in the Greater Washington area.

Verizon is charging users $30 a month above their normal subscription rates for 3G service, which is noted for offering data connections at speeds that equal or exceed those of dial-up modems.

But, Loredo said, Verizon's initial offering lacks the bells and whistles of similar services offered elsewhere in the world. For instance, cell phone users in South Korea - using networks that run on the same platform as Verizon's new 3G offering - are able to snap digital photos with their telephones and ship them to friends through the air.

"[Verizon] has to develop services that really wow the customer," Loredo said, adding that the firm has been mum so far on its anticipated 3G service offerings.

No envy at Nextel

If Reston, Va.-based Nextel Communications Inc. is envious of Verizon for its foray into 3G, you wouldn't know it from talking to Laurie Hoyt, the firm's director of business development for the Internet and wireless services group.

"Nextel is in no way threatened by a 3G rollout," Hoyt asserted.

Hoyt helped negotiate a deal announced last week in which Nextel will partner with Motorola and Waterloo, Canada-based Research In Motion (RIM) to develop voice-capable Blackberry services.

RIM is the steward of the highly regarded Blackberry service, which offers always-on, wireless electronic mail to be sent and downloaded on a small device equipped with an a-z keyboard. The RIM partnership seems a natural for Nextel, which is noted for its push-to-talk "Direct Connect" service.

Both companies cater primarily to business clients.

"The Big Four [wireless carriers] " they don't scare me - frankly, they can have their consumer market," Hoyt said. "We don't like being No. 5 in a five-horse race, but we'll take our customer base any day."

Nextel has postponed its 3G plans, opting instead for technology to increase the capacity of its existing network.

MedImmune's star rises

In a year that saw several area telecoms decimated and other tech sector companies ravaged by the recession, biotechnology proponents must have been reassured by the way 2001 ended for Gaithersburg, Md.-based MedImmune Inc.

The firm racked up a $99 million fourth-quarter profit, bringing its 2001 earnings to $149 million, a 26-percent increase over 2000. The fourth quarter bump is customary for the company because its primary product, Synagis, treats a lower respiratory illness in pediatric patients that typically flares up from October to May.

The firm expects continued growth, projecting 2002 earnings of $0.65 to $0.70 per share on revenue of $900 million compared to this year's $0.68 per share earnings on revenue of $618.7 million.

MedImmune also is projecting that the Food and Drug Administration will grant approval by the third quarter of this year for FluMist, a nasally delivered flu vaccine that some analysts expect to become a blockbuster drug. MedImmune acquired Aviron, the California firm developing FluMist, in January for $1.3 billion in stock.

Taylor Lincoln, a reporter for Potomac Tech Journal, can be reached at tlincoln@potomactechjournal.com or at (703) 465-5371.