Comments from two Bear Stearns Conference attendees [from MetaMarkets]
By Sean Donovan
Qualcomm has always had a pretty interesting story. And whereas I think that the Globalstar news is hardly good, I doubt that it is worth 13% (as you mentioned, Matt, $6 billion).
The room they chose for Qualcomm was nowhere near enough for the number of people who wanted to attend. There were seats for 110 or so. That meant there were about that many standing.
It is undeniable that CDMA tech is where it?s at in cell phone technology. Even Nokia has admitted that they are behind the times in that regard (Nokia's CEO said as much to Maria Barteromo last week on CNBC). This doesn?t necessarily mean that the best tech will win in the marketplace (remember Mac OS vs. DOS, or beta vs. VHS). But in a time such as this, where the cellular revolution is (in my opinion) pretty much a foregome conclusion, the best tech does make a difference. And they have the best knowledge in that tech, and are willing to license it out.
And that isn't all they have. As you may know, most cell phone technology will be required to have positioning capabilities in the not-so-distant future (for emergency 911 purposes). Qualcomm already has this technology. Currently this tech is used in tracking trucking and delivery vehicles. Which means that this should be readily portable to the handheld world.
Beyond that, their trials with flat rate service were very promising. I don't know about you, but I find it pretty outrageous that I have to pay for incoming as well as outgoing calls. In other markets (Japan and Europe) the payment schemes are not that different that regular phone service. In other words you pay only for the calls you make. In Chatanooga (don't know why they chose Chatanooga to try it out), you can get unlimited local calls on their service for $30. Consider that in Asia many people leap frog land line tech and go straight to cell phones and you can understand why half the population of Japan uses one. To me this was exciting. It made me glad I went with Sprint, if only because I didn't have to sign a yearly contract. Something better will come along very soon, or at lest I hope.
Furthermore, Qualcomm's inroads into data transfer put others to shame. This fall they will be rolling out 300 kbps data rate cell phones in Korea. By 2004, they expect to have 2.4 mbps. This is more than enough to do 2D moving images or 3D . How cool is that.
Still, I can understand why there is volatility in this market. The love-hate relationship with China is frustrating. And while their devotion to Globalstar is commendable, it is also a recognition of the problems Globalstar has yet to overcome.
====
Sean Donovan
_________________________________________________
Qualcomm's getting hammered today following a warning by the company's CFO that a failure in faltering satellite telephone provider Globalstar would have a negative impact on 2001 earnings. Sean Donovan, our man-on-the-scene at the Bear Stearns conference, said the sessions in New York were generally upbeat. That said, reports on the web have CFO Anthony Thornley saying that a failure in Globalstar would shave a dime off Qualcomm's predicted 2001 earnings of $1.42/share. Bearn Stearns lowered its 2001 earnings estimates; Lehman didn't.
Qualcomm is down 13% as I'm writing this, and that seems like a bit of an over-reaction. Sure, the Globalstar write-off would be unfortunate, but is .10/share really worth $6 billion in market value? The Globalstar write off, if it happens, would be a one-time charge, and would have no impact on Qualcomm's business plan or future revenue schedule. Perhaps the market remains uncomfortable with Qualcomm's on-again, off-again relationship with China, and was waiting for any opportunity to punish the stock.
---------------
Matt Hougan
|
