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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 176.67+1.6%3:59 PM EST
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To: Stock Farmer who wrote (125688)11/26/2002 11:39:47 AM
From: Eric L  Read Replies (2) of 152472
 
John,

<< CDMA subscriber growth. Any theories why this should be so? >>

Nice job spreading the numbers.

Nothing there is really surprising to me.

1999 was an exceptional year for both CDMA subscriber unit growth and growth rate. It was the last year we saw >100% hypergrowth YOY. This year we (will) have declined to <30% net growth rate albeit on a considerably larger base.

CDMA Subscriber growth was relatively flat from 1999 through 2001.

Year          1999   2000   2001   2002E  2003E
Sub Net Adds  27.1m  30.3m  30.9m   34.0m  ?40M?


QCT gets paid on ASIC sales which are roughly equivalent to handset sales x chipset market share (slackers point), and QCL gets paid on handset sales which are roughly equivalent to handset sales although until end FQ3 2001 up front licensing fees bounced in as well.

Handset sales = net sub adds + conversions (analog to CDMA) + replacement - churn out.

In a banner year for other technologies 2000 CDMA replacement sales were impacted by Korean subsidy ban and high penetration offsetting continued good growth in the Americas and not a lot of new technology adoption by carriers.

In 2001 the whole industry got hit on declining net adds and poor replacement rates (although Qualcomm benefited by newer, cooler handsets in Korea which helped maintain replacement rate). Qualcomm also had increased offsetting QCT revenue from CSMs.

In 2002 Qualcomm is benefiting from the newer, cooler handsets, rapid transition to 1xRTT, a virtual monopoly on 1xRTT chipsets (Motorola single sourcing), good timing on delayed replacement cycles, and decent consumer spending.

In 2003 we should see good growth in China (perhaps India) offsetting overall industry growth decline due to increasing penetration in traditionally strong markets and continued good replacement rates and very high market share of 1xRTT chips even with Nokia providing their own.

Just my quick thoughts.

- Eric -
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