GOLDMAN SACHS
> Comm ICs: Highlights from CTIA
> Nathaniel Cohn (New York) 1 212 357-7512
> Seogju Lee (New York) 1 212 902-6785
>
> QUALCOMM, Inc. [QCOM] $40.47
> EPS (FY Sep): 2002E US$0.90, 2003E US$1.11 - Recommended List
>
> Conexant Systems Inc. [CNXT] $11.70
> EPS (FY Sep): 2002E US$-1.25, 2003E US$-0.09 - Recommended List
>
> * CTIA showcased next generation technologies from handset and
> infrastructure equipment vendors. We noted very good momentum for CDMA
> 1x with numerous handsets to be released throughout the remainder of
> the
> year. GSM in the United States continues to progress with GAIT phones
> being demo'd and numerous new GSM and GSM/GPRS phones showcased at
> vendors' booths. From a component standpoint, only QCOM and CNXT, in
> our coverage universe, had a presence at the show although Kyocera,
> ANAD's primary CDMA customer was there. Overall the tone was upbeat
> although there were few market moving datapoints and the following
> highlights some of the key takeaways related to the covered companies.
> * 1X MOMENTUM IN THE US BUILDING WITH A NUMBER OF NEW PHONES EXPECTED
> The show highlighted that 1x momentum in the US was building with
> numerous phones from vendors including Nokia, Sony-Ericsson, Motorola,
> Samsung, LG, Audiovox, Kyocera, and others expecting to ramp shipment
> to
> US carriers beginning in April and through the remainder of the year.
> Handset vendors are offering a wide range of 1x phones that span from
> voice-only phones with scaled back BOMs for the cost sensitive market
> to
> high-end models with larger, color screens, with notables from Samsung,
> LG, and Motorola. While data business models have yet to be fully
> established, wireless carriers are expected to aggressively push 1x
> products given the benefits of increased voice capacity. Verizon
> maintains a leadership position domestically with the announcement of
> plans to launch a 1xEV-DO field trial in the Washington DC area;
> although conversations with carriers and equipment vendors point
> towards
> mid-03 for wide scale EV-DO deployment in the US, and many expect EV-DO
> will come later. Verizon also remains on track with its aggressive
> 1xRTT rollout plans with 20% or so of Verizon's network already
> converted and expectations to have approximately 70% converted by
> yearend; full nationwide coverage also remains on track for the May
> timeframe.
> * GSM/GPRS ROLL OUT CONTINUES, BLUETOOTH NASCENT BUT GAINING TRACTION
> On the GSM front, carriers and equipment vendors showcased current
> GSM/GPRS roll out and discussed EDGE, which many expect will begin
> deployment in the US in the mid-03 timeframe. Additionally, GAIT phones
> were demonstrated by Siemens, which announced the launch of its GAIT
> phone with AT&T wireless, and Nokia, which showed its GAIT phone in its
> own and Cingular's booth. On the bluetooth front, the technology
> continues to slowly, but surely gain traction in the market with
> numerous handsets (Motorola, Sony-Ericsson, and Nokia) and accessories
> vendors (including Plaintronics, Jabra, and numerous others) showing
> devices integrating the short-range wireless networking technology.
> Accessories ranged from headsets, dongles for use in non-Bluetooth
> equipped phones, and gadgets including Ericsson's 'ChatPen'. Bluetooth
> chipset vendors indicate that pricing continues to migrate down with
> pricing currently in the $7 to $10 range and $5 expected to be
> reasonable shortly based on customers' volume expectations |
