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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (24386)	5/9/2000 12:24:00 PM
From: Mike Buckley	Read Replies (5) of 54805

Can you say, Tornado? Frank and all, CDMA adoption is clearly in a tornado but the numbers continue to slip. The new numbers aren't yet up at the CDMA Group site, but based on the 101% increase cited in the press release it's reasonable to assume a world-wide subscription base of 57, 315,000 subscribers. That means 7.2 million subscribers were added in the 1st quarter. While it's no surprise that fewer subscribers were added than in the gift-giving 4th quarter (though that quarter was also a little disappointing), it is a surprise to me that fewer subscribers were added in Q1 than the 7.5 million added to the books in Q3. We are seeing that as the base of subscribers grows the rate of growth is slowing. In the last five quarters, the annual growth has consistently slowed from 209% growth to the current 101% growth. We will continue to watch these numbers closely, not just because of our interest in Qualcomm but for the lessons we can learn about tornados in general. I suspect the lessons will become especially fascinating as we see adoption of HDR kick in. My thinking is that we will see a second HDR-related tornado in the next couple of years. I also believe that the only way the numbers will substantially improve for the voice-only subscribers is if the company does a far better job of getting the word out to consumers about the advantages of CDMA. The typical consumer doesn't ask for CDMA. Worse, the typical consumer buying a wireless device or the typical employee using an employer-owned device has never heard of CDMA. --Mike Buckley

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