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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.04

+1.5%

11:54 AM EST

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To: Harvey Rosenkrantz who wrote (27864)	4/21/1999 10:39:00 AM
From: DaveMG	Read Replies (2) of 152472

To: +brian h (1817 ) From: +tero kuittinen Wednesday, Apr 21 1999 8:35AM ET Reply # of 1821 Sorry mike and brian - some of us have editorial deadlines to meet. I'm not getting so much out of SI contributions that I would want to spend time here every day of the week. Look at the Nokia thread contributions and you see I cut down my time here months ago. I don't see the point of engaging in arguments with people who call me a liar and a megalomaniac. When people who use their own name argue with people who hide behind pseudonyms the latter can always crawl deeper into the gutter. I don't want to follow. I just used the search engine with words: "Tero" and "marginmike" and the results speak for themselves. I don't know whether I'm dealing with an obsession or just a fixation here, but it's creepy enough either way. Statements like "I'll never make peace with Tero" are so melodramatic and out of step with the significance of SI that I don't know what to make of them. My arguments about Qcom concern their long-term strategy. If I pointed out that the revenue growth during the last quarter was flat, how are these quarter's numebers supposed to prove that statement wrong? If I point out that the whole Q-phone project has been a fiasco, how is the Thin Phone supposed to prove that argument wrong? What was the sense of launching a high-end model that flops within months? I don't think that a low-end phone that demands an external battery to give it a stand-by time in line with the industry norms is going to do anything to change the fact that Qualcomm faces eroding handset margins in 1999. The recent GSM network sales to China, Australia, etc. confirm that this standard will keep its lead over IS-95. If people think that CDMA companies are better investment targets nobody's stopping them from acting on their beliefs. The GSM-CDMA competition in Singapore, Hong Kong, etc. has shown that the lower prices and greater variety of GSM handsets puts CDMA handsets at a considerable disadvantage in the marketplace. I don't think that in 2-3 year range anyone but companies making both GSM and CDMA phones can make a decent profit. Much of what we know about benefits belonging to the dominant standard and large volume high-tech manufacturers back this assumption. Smaller handset companies simply don't have the muscle to thrive. The fact that Qualcomm has not faced any stiff competition in the US CDMA handset market means that you can't extrapolate their future profits on 1998 and 1Q 1999 numbers. We'll see the outcome of real CDMA phone competition later this year. The leading Korean IS-95 operator just made a deal with Nokia about W-CDMA development. I refer to my earlier comments about Korea and W-CDMA. The chiprate of W-CDMA phones will be the one that Qualcomm vehemently opposed just weeks ago. I'm not getting into the "licensing revenues will save us" argument. Nobody has any concrete idea of what the 3G sales will be and how big a headache Qualcomm's handset unit will turn into. If they really decide to invest in smartphones, China, Europe and 3G phones the potential downside is essentially limitless. Nothing in Qualcomm's track record shows any special gifts for high-quality manufacturing, cutting-edge design or techological leadership. Witness this summer's smartphone with sub-40 hour stand-by time and clunky design. What's the point of throwing venomous hissy fits at non-believers? Time will tell us one way or the other. Tero

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