Qualcomm Incorporated (QCOM) Message Board

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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: Dennis Roth who wrote (117362)	4/24/2002 8:18:13 PM
From: arun gera	Read Replies (2) of 152472

>The company didn't commit a fraud. They are the victum of a fraud and are fixing the problem. But such fine distinctions are lost.> As PCSTEL points out in on the LWIN board (http://www.siliconinvestor.com/readmsg.aspx?msgid=17377117), the fraud negates an important aspect of Leap's approach. Leap was hoping to use reseller incentives to lower its own Sales and Marketing costs (by not expanding Cricket stores). One half of this plan did work out. Leap's sales and marketing costs dropped greater than expected (a surprise of few million dollars). However the fraud costs associated with Leap's channel sales were shocking. I estimate those to be between $25 to 35 million dollars a quarter. The net result is that the Cost Per Gross Add for Leap was about 10-15 percent higher than Leap had guided. The $246 CPGA is still way lower than other wireless providers. However, it is much more importnat for Leap to lower its CPGA as it has lower ARPU than nationwide carriers. Leap needs to demonstrate a better control over fraud costs to win over more investors. Otherwise the quarter was pretty good. Maybe they hid all the bad in one line item - Equipment Costs. Arun

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