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Technology Stocks : The New Qualcomm - a S&P500 company
QCOM 174.82+0.1%3:59 PM EST
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To: PLeaps who wrote (4429)12/22/1999 4:04:00 PM
From: John Biddle  Read Replies (1) of 13582
 
My guess: NOK/China Telecom

I assume by naming two companies you are expecting a split sale along the lines of those pointed out bu many on this and the other Q thread, i.e., handset R&D & engineers to NOK and mfg plant and laborers to China telecom.

I still think it makes no real sense for NOK to buy. They can just start buying Q ASICs and get almost the same benefit at dramatically lower costs.

I also don't believe that Q will sell cheap, as many assume, especially after the Solomon Smith Barney analysis was published. Their thesis is that in order to lock in a long term ASIC deal, Q will sell cheap. I disagree. To sell a CDMA phone you need a good ASIC. You either get it from Q (Q makes profit on the sale), you make your own (Q gets a royalty on the chip), or you buy a chip from a Q competitor (Q gets a royalty from the chip seller and an increase in the phone royalty). For Q, the incremental earnings of an ASIC sale over the other alternatives are what would counterbalance a reduced price for the division. Division currently sells ~ 10 Million phones/year, so to make up the difference between the $750 million presumed sale price and the $5 billion price which would still be accretive to NOK or MOT, will take a very long time.

I think a surprise is in order, and a sale to a Chinese firm with an announcement of the committment of China to CDMA and some help with funding from Q (in return for normal royalties) is my bet, longshot though it is.
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