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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 165.30

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12:58 PM EST

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To: DaveMG who wrote (31443)	6/2/1999 9:05:00 AM
From: DaveMG	Read Replies (2) of 152472

More Tero on Ericsson thread.. To: +Caxton Rhodes (3290 ) From: +tero kuittinen Wednesday, Jun 2 1999 7:10AM ET Reply # of 3293 Let's look it at this way: China Unicom is inheriting a 60 000 subscriber CDMA network from Great Wall. That 60 000 is the number of new GSM subscribers China Telecom adds in 48 hours. As in every 48 hours. China Telecom intends to build a 2 million subscriber CDMA network this year - which would be the number of GSM subscribers China Telecom adds in seven weeks. As in every seven weeks. I'm sure the CDMA community gets another opportunity to talk about 1'000% sales increases. But the growth of GSM is not likely to experience any impact. It hasn't in Singapore or Hong Kong where CDMA has been available for years. Sprint already warned about 10-15% dip in sequential subscriber additions during the second quarter. The Korean handset sales collapsed after the government banned subsidies. The subsidies may be reinstated - but the point here is that the 1Q CDMA subscription growth was artificially inflated for these two reasons: Sprint's unusually strong showing, which is not being repeated during the second quarter; and the Korean sales bubble caused by people rushing to buy handsets at the artificially low prices before the system was changed. Usually, all operators have a stronger 2Q than 1Q - it's an annual industry pattern. Omnipoint and many European operators have already announced sequentially accelerating subscriber additions. We'll see the real GSM vs. TDMA vs. CDMA growth pattern emerge during the next two quarters. It's true that CDMA sales are now hampered by slow introduction of new handsets - but pretty much all new CDMA handsets have been late to the market during the last two years. This is not a one-time occurence - it looks like a pattern. In the autumn, US market will have the Motorola V-series debut in GSM, Nokia 8800 debut in TDMA, Ericsson T28 in GSM and Nokia 7100 in GSM. The biggest global hits of 1999 are first sold in GSM and TDMA formats. We don't know yet which of these models is the cross-over consumer icon of next fall - but it will be one of them. This applies to Australia, Singapore, Hong Kong and China as well - the CDMA models are two steps behind. That's what kept the TDMA and GSM growth ahead of projections in 1998. We're set for a repeat performance.

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