The New Qualcomm - a S&P500 company Message Board

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Technology Stocks : The New Qualcomm - a S&P500 company

QCOM 137.34

+0.8%

Feb 6 9:30 AM EST

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To: KyrosL who wrote (643)	8/7/1999 9:57:00 AM
From: Clarksterh	Read Replies (3) of 13582

Kyros - Good questions. The answer to the first two questions involves efficiency of scale. Qualcomm is substantially smaller than the biggest players of their competition. Thus they almost inevitably are going to have worse margins. I guess if they had some revolutionary manufacturing or distribution process they could overcome this deficit without the volume (as did Dell in computers or Ford in cars), but their strength is the underlying technology which they let out of their hands by the continual process of selling ASICs. The goal is to maximize profits by putting competition into the marketplace just beyond the first choke point that Qualcomm thinks it can control. This maximizes the efficiency of the rest of the manufacturing chain and thus, via supply and demand elasticity, it maximizes revenues. On the topic of infrastructure there is yet another issue - one which was probably insurmountable except by an absolutely gifted salesman. Infrastructure suppliers must provide financing to their customers in the form of very long times between delivery of product and collection of payment. This is a huge drain on cash, and small companies just can't do it. I had hoped Qualcomm would grow fast enough that they could keep up, but it is a dangerous game and involves a lot of leverage. Just as well to be out of it. Finally, in regards to the 'Go Brain, Go' campaign, I would agree that if it comes across as slapping themselves on the back then it isn't just bad, it's horrendous. However I suspect it is more in the nature of emphasizing getting the maximum potential out of a customer's brain with only a small catch phrase saying we use our brains to maximize your potential. Now, having written that, it still comes across as somewhat arrogant, so I agree that it is going to be difficult to engineer a non-arrogant campaign with that slogan. We'll have to wait and see. It could be great if done well, but you are right that it could get screwed up pretty easily. Clark

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