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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 155.82-1.3%Jan 23 9:30 AM EST
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To: Jim Lurgio who wrote (56205)12/23/1999 1:41:00 AM
From: Randall Knight  Read Replies (2) of 152472
 
Although I don't claim to come close to Gregg's knowledge and insight, here are my observations of the conference call (italics are observations from the CC. Regular text are my comments):

1) 70% of all CDMA ASICs that Kyocera buys will be QCOM, and QCOM employees will be designing new Kyocera phones using Q chips.

2) Dr. J.: "Slightly more than a handful..." of companies were in the running for the handset sale.They have had discussions with Nokia and hope to have more.

I firmly believe that Q management made the best deal. They didn't sell out simply because a bigger name was involved.

3) The deal takes care of employees.

4) The revenue stream will improve three ways:No more loses from the handset division, new royalty stream from former QCOM phones, Normal margin on ASICs used in former QCOM phones.

5) RE: GSM, There are "potential opportunities near term" for strategic alliances. No one company can guarantee GSM royalty compliance. Dr.J: " ......another arrangement we're looking at that I am not prepared to discuss at this point."

This was very interesting. Dr. J. implied that something else was in the works regarding a GSM/CDMA arrangement.

6) 1X testing is kicking ass. (my words) By 2001 carriers better have a strong data capability and 1X is better than anything out there. CDMA2000 is moving along nicely. W-CDMA is way behind, although both result in Q royalties.

I believe I also heard Dr. J. say that there could be some commercial 2.5G offerings by the end of 2000 calendar year. Pity those carriers who are relying on vaporware.

7) China negotiations are moving along and could possibly conclude next month. China wants to trade market for technology. Dr. J. said they were looking at that in terms of profitability.

Dr. J. is no fool and won't sell the franchise to China without a quarantee for profit.

Overall, I think Q management did a great job once again. My feeling is that Dr. J. feels that the pressure isn't on QCOM to perform as much as it is for NOK to perform. There is no way that Nokia can compete by making their own ASICs. QCOM is already several generations ahead and gaining ground daily. This next year should be very interesting.

Also, expect some more news in the next few weeks regarding a GSM/CDMA "strategic alliance." The purpose of which would be to allow GSM operators to smoothly transition toward higher data rate CDMA offerings. I believe that pressure is mounting worldwide for the CDMA buildout. TDMA is a dead man walking.
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