Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.01

-0.3%

3:59 PM EST

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To: JGoren who wrote (35205)	7/16/1999 3:36:00 AM
From: Bux	Read Replies (2) of 152472

I think and hope you are right about management being a little mum on the future. It's obviously very bright in all the major areas. I listened to the Nextel conference call today because I was trying to understand their market valuation of 15.5 Bil. compared to the mighty Q's value of "only" 23.0 Bil. After all the Q holds the keys to 3-G worldwide and all Nextel has is a national network and the start of a few networks in other countries. They have massive debt, negative cash-flow that is not projected to turn positive in the visible future, massive investment in a technology that will not allow a competitive pricing structure, and they have sold off their most valuable assets (cell sites) to help keep them afloat and are now leasing them back. Surprisingly, management managed to paint a very rosy picture looking forward carefully avoiding using the concept of "profit", instead focusing on less tangible things as growth, etc. An analyst asked how much they would need to spend on capacity improvements for the rest of the year, 1.5 Bil, 1.6 Bil? Management acted as if he had never asked that! There were lots of rosy statements about all the new subs and how they were keeping the average revenue/sub above $70/mo. (wait until the subs figure out they are over-paying) also how they were testing data services in six cities through the end of the year and if the tests are successful they will roll out data in the first Q of 2000. Churn had increased but was still the lowest in the industry. I guess the high price is based on low churn, high revenue/sub, fast addition of new subs and data roll-out. What I see is a network that needs ungodly sums of capital and new spectrum if the current rate of growth is to be maintained. Where will this capital come from if competition forces lower prices? I've never shorted a stock and I won't short this one now since it's obviously got legs and investors are only looking towards the next earnings release oblivious to the big steam-roller called CDMA that is coming up behind it. Somehow I sensed that management knows it's on a dead-end road but they need to keep the rosy facade up a while longer. I realized that I don't know the first thing about shorting. If I short does my account go into margin (assuming I have no cash balance)? Can I remain short as long as I like and have the funds to guarantee the eventual purchase or can i be forced to cover for other reasons. If I can be forced to cover for reasons other than liquidity, what are my options if I think it is still going down? Does anyone know where I can find a FAQ on this? TIA Bux

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