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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 173.96

+1.4%

Nov 11 3:59 PM EST

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To: Maurice Winn who wrote (24156)	3/13/1999 8:53:00 AM
From: Clarksterh	Read Replies (1) of 152472

They are quite desperate to get a presence in CDMA and they need to do it quickly. I suppose they'll be able to bring some leveraged production line experience to bear, which Q! lacked. Having infrastructure would also leverage their marketing, operations and network capabilities. They'll be able to produce QCells to overlay GSM across Europe, probably more effectively than Q! would be able to, in a complete overlay turnkey solution for existing customers. Exactly!!! And it is for precisely those reasons that I would hope that Qualcomm keeps some ownership in the infrastructure division. I would consider a JV like the one with Sony ideal. In addition, if Qualcomm sells the infrastructure division entirely they are going to have a harder time both making and 'selling' improvements in CDMAOne. As I've said before, Hughes does not keep their satellite area because it makes money (it doesn't); they keep it for strategic reasons (e.g. it allows them to pioneer new technologies like DirecTV). This is actually somewhat similar to Microsoft embedding the browser in the OS - it is almost surely a money loser, but it is strategically very important. Clark PS I am not saying that there isn't a 'right price', but has to be very high IMO - probably higher than Ericsson is willing to pay. (e.g. $2.0B in cash, a contract to use only CDMA chips from Qualcomm in their phones and basestations for the next 6 years, a license to GSM with net royalties to Q! of 1 or 2% in a GSM/CDMA phone, and an agreement on chip rate and synch for 3g.)

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