Mike,
This thread effectively disagreed with their Q demand forecast weeks ago, citing that the general consumer would not be willing to pay $500 for a phone. Now they have a "large" amount of Q phone inventory (not just for Korea). CC also revealed that they recognized their mistake, and had already implemented their cost containment plans, changed their marketing strategy, and were waiting for the "SEA excuse" to lay off 700 temporary workers and shift manufacturing to QPE in response to "unexpectly soft" market demand for Q phone, "unexpectedly large" demand for lower cost QCP-2700 phones, and the threat of new lower cost phones exported from SEA.
While the earnings shortfall is impacted by Korea, "the softened" Q phone demand, IMO, is also factored somewhat significantly into earnings shortfall. That might also explain the surprise over Korea's impact to profitability. If QCOM can sell 100,000 Q handset and clear $150 each - that's $15,000,000 added to the bottom line.
However, demand for the Q phone is still there among target consumer groups, but the marketing/sales group are not effectively creating awareness. These consumers will buy, but they have yet to hear/see a compelling case for the sale.
Can't make it Tuesday, but would be curious to hear how they respond to gentle probing: How many years did top marketing/sales folks spend working with other manufacturers? How is broker/sales network structured? How did they arrive at their original demand forecast for Q phone? |
