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Technology Stocks : Nokia (NOK)
NOK 7.030+1.7%Nov 12 3:59 PM EST
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To: brian h who wrote (2615)11/3/1999 9:45:00 AM
From: tero kuittinen  Read Replies (3) of 34857
 
Planet earth calling Brian - the chipset sales growth to "the world's leading CDMA handset and infrastructure manufacturers" was 29%.

That's stellar sales growth.... if you're making trucks. However, CDMA phone market grew by over 100%. So who do you think is grabbing that growth? Non-brands like Sanyo that are Qualcomm chipset customers? Or Nokia and Motorola who make their own chipsets? Take a look at that 29% figure and tell me what you think.

BTW... in the handset division, the earnings before taxes as a percentage of revenue dropped from 20% to 3% during the last 12 months. That's how they got the sales growth to top 70%; by trampling margins to the floor. And this is the unit they plan to sell for big bucks - a handset operation that manages to lose market share even at fire-sale prices.

Here's the kicker - the new phone models from Qualcomm debuted last summer. In other companies, handset divisions *increase* profit margins after new model intros. In the magical world of Qualcomm, the margins actually collapse after new phones are launched. Now - where do you see the margins and market share of this unit in 1Q 2000, when the new models that aren't selling even now start aging? What do you think will happen to the company who takes over this time bomb?

As always, I'm humbled by the majesty of the Qualcomm spin machine in action. Cutting back on basic research and advertizing to make the numbers is obviously a brilliant PR move. We'll see how much sense it makes in the long term.

Tero
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