Goldman Sachs: Qualcomm still expects CDMA business with Unicom, MO
Goldman, Sachs & Co. Investment Research
Qualcomm still expects CDMA business with Unicom, MO
* * FULL ACTION in the A.M. - U.S. * *
New York Investment Research (New York) - - Investment Research
===================== NOTE 7:30 AM June 06, 2000 ======================
11 QUALCOMM, Inc. (QCOM) $67.25
Qualcomm still expects CDMA business with Unicom, MO
Mary Henry (New York) 1 212 902-6787
Ajay Diwan (Menlo Park) 1 650 234-3311
EPS (FY Sep): 2000E US$1.10, 2001E US$1.40 - Market Outperformer
* Qualcomm indicates that information it has received from China's Unicom
directly conflicts with press reports that Unicom will delay CDMA
implementations for three years while waiting for W-CDMA. According to
Qualcomm, there is still some likelihood that Unicom will deploy
CDMA2000 later this year or next year. China is not a factor in fiscal
'00 estimates (our rounded $1.10 is $0.05 above guidance), and '01
estimates are a very imprecise calculation in any case (our $1.40 is
consensus). The level of Chinese CDMA deployment is likely to be
revisited before there is much certainty. Long-term investors should own
QCOM for wireless data and plan for near-term stock volatility.
* FINE TUNING THE NUMBERS; WE DON'T INTEND TO IMPLY PRECISION, THOUGH. We
are maintaining our current rounded fiscal (Sept) estimates for
Qualcomm, although our $1.10 estimate for this year has been fine-tuned
to a single-point $1.08 to reflect some of the pro forma guidance of the
company.) Our June quarter is now $0.27 (versus $0.28 before) and our
September quarter estimate is now $0.28 (versus $0.31). We are still
about a nickel above guidance. There is no change to our $1.40 estimate
for next fiscal year, though we regard that number as a very rough
forecast.
* KOREAN HANDSET BAN NOW UNDERWAY, NO NEAR-TERM EFFECT BUT
LONGER-TERM
IMPACT IS HARD TO GAUGE. The June quarter estimates should not be
significantly affected by the Korean ban on handset subsidies, which
took effect June 1, since there was reportedly a flurry of buying in
advance of the ban. If the ban continues for many months and operators
don't use special promotions, Qualcomm could be affected. A third of
Qualcomm's chip sales come from Korea (though that percentage has been
steadily declining), and most of the handsets represented by those sales
are exported from Korea. Last year a similar ban ended after a couple
of months.
Important Disclosures (code definitions attached or available upon request)
QCOM : CF, CS, DIR, M
=============== Further Information ===============
This investment commentary was made available on the Goldman, Sachs & Co.
Research Xpress at 07:49 New York time on 6/06/100.
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