Read your analysis of the call a couple of times and have some comments and/or questions:
1-Segment reporting in the earnings release ... shows handset lost $39,983 pre-tax in FY99, which, pro forma the sale of the handset division, would add about $.13 cents per share on an after-tax basis (if my calculation is correct) for the year--using 194,220 weighted average shares outstanding.
> If I divide $39,983 by 194,220 (000s ignored) I get .206 cents per share. I am missing something? Also, using segment reporting results as the numerator we are assuming that royalties and ASIC sales prices charged internally will be the same as charged to handset division buyer. I think this is safe to assume.
4-TT gave guidance of mid-$.90's sequential Q1 earnings for 2000; [very conservative, especially given estimates that management was comfortable with projections of 70 million ASICs for FY2000; either that, or ASP erosion will be far worse than this quarter--more on this topic below; from $.91 to estimated $.96, let's say, is not exactly what you would call stellar sequential growth];
> Someone did say on the call that ASP erosion had substantially lessened, maybe even stopped in the current quarter.
7-INTC and DSP--IJ said they were looking at it, would probably do the deal [the interesting comment that caught my ear was IJ's characterization that there were "important" issues in this negotiation--I think that Q is going to evaluate it long and hard];
> A number of us on the thread speculated that INTC would not have gone through with DSP purchase without QCOM's prior OK. Maybe that is not what happened. Maybe INTC has an escape clause in its deal with DSP in case it does not get a CDMA license. Based on Jacobs comments, I am wondering if it wouldn't be "gorilla-like" for a company like INTC to go forward and "assume" QCOM would come around. I am beginning to think these may be interesting negotiations.
9-non-recurring charges to income for Russia/Ukraine were taken in the quarter;
> I believe they said that they wrote off their entire investment - 100%
10-HANDSET DIVISION SALE: Had preliminary discussions with several prospective purchasers. IJ said the priorities in getting a deal done were a) keeping commitments to customers; b) getting a buyer with strong marketing and branding; c) strategic ASIC purchase commitments--10 years [I think IJ said]; and d) price. Hopes to announce by year-end. [This becomes a bit worrisome to me: sounds no closer to a deal than at the end of September--would be a major hit to the Q and the share price if management doesn't get a clear and unequivocal positive out of this transaction--a little like saying what your sin qua non is going into a game or a deal and coming away without it--jmho];
> When Dr. Jacobs was on CNBC and was asked this question he looked to me like the proverbial cat who had a bird in his mouth. After seeing him answer the question, I am confidant a deal will be done.
13 - ...Don Schrock [been very impressed by him in the last two CCs and at NYC analyst meeting]
> Can you tell me what he does? I did not catch it on the call. |
