Motorola Inc. announced a key order Monday from GTE Corp. to supply equipment for a personal communications services network, positioning itself for a top role in digital wireless communications.
Personal communications services (PCS) allow a much broader range of communications than mobile cellular networks, such as two-way paging, electronic mail, clearer sound and more reliable connections.
The Federal Communications Commission this year sold rights to these portions of the airwaves in a multibillion-dollar auction, and now the companies that won licenses are starting to build their networks.
GTE won licenses to serve Atlanta, Cincinnati, Seattle and Denver. GTE Mobilnet, the GTE unit that is the second-largest cellular telephone company in the United States, has the potential to serve 72 million cellular and PCS customers.
GTE Mobilnet beat rival AT&T; Corp. Although the size of the contract was not disclosed, analysts said it was worth several hundred million dollars.
"GTE is a major player in cellular and PCS, and their choice is going to be an opinion maker," Goldman Sachs analyst Rajiv Chaudhri said.
"GTE's decision to go with Motorola is going to lead others. It will have some spillover effect," Chaudhri added.
Motorola, which had been under pressure in recent weeks as technology stocks have suffered from profit taking, shot up to a record high Monday. Its stock gained $3 to close at $81.75 on the New York Stock Exchange.
Charles DiSanza, an analyst with Gerard Klauer Mattison, said the GTE order "sets up the hope that [Motorola] will get a large chunk" of orders for the massive PCS network Sprint Corp. intends to build with its cable TV partners. The Sprint venture includes Tele-Communications Inc., Comcast Corp. and Cox Communications.
Motorola, a Schaumburg, Ill.-based communications equipment giant, may be able to book at least part of the GTE order as early as the fourth quarter of 1996, analysts said.
Motorola probably did not cut into its profit margins to win the order, Chaudhri said. "I think [Motorola] won based on their technology, not by cutting prices. Motorola has a history of not cutting prices to the bone to get business."