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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 154.12-3.3%Jan 20 3:59 PM EST
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To: JohnG who wrote (105931)10/4/2001 12:27:09 PM
From: JohnG  Read Replies (1) of 152472
 
Nextel decision represents a turning pont for the company. Their choice was to see 3G applicatons as 1) an opportunity for the company to be embraced by making a $5 billion expenditure on a CDMA parallel system OR 2) as a threat in the form of making a large capital expenditure on CDMA only to find that 3G applications would not be well received resulting in low return on their investment. As they were running out of voice capacity they had to do something to keep present voice customers. With a lousy balance sheet and the lousy economy affecting their mainly busuiness customer list, they probably saw the switch to 1X as betting the company on unproven future demand for 3G killer applications. Clearly, they had a tough decision, because, if the 3G killer data apps do materialize rapidly, they appear to have picked a dead end course. Still, the development of killer data apps is totally out of their controll. Probably they made the prudent choice for maintaining shareholder value. If all else fails, they will be an acquisition target with 10 MHz of clear spectrum. Now that QCOM has incorporated the Walki-talki feature in their ASICS, it is just a matter of time before some operator duplicates the Nextel service and erodes their customer base.
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