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To: DaveMG who wrote (176)	8/3/1999 4:04:00 PM
From: LBstocks	Respond to of 426

Full text of Salomon Smith Barney comments: QCOM: MOT Entry Into CDMA ASICs a Positive, NOT a Negative to QCOM Salomon Smith Barney Tuesday, August 03, 1999 -------------------------------------------------------------------------------- --SUMMARY:--QUALCOMM, Inc.--Telecommunications Equipment MOT, which has been paying QCOM royalty fees on its CDMA infra & handset sales, could soon make CDMA ASICs, adding yet another royalty stream to QCOM. In fact, MOT announced today it would make CDMA chipsets. * We believe MOT's potential entry into the CDMA ASIC marketplace could potentially be a boon for QCOM for several reasons: (1) Most, if not all, 3G phones will be CDMA based; (2) 5 Billion mobile phones could be sold over the next 5 years; (3) There's 2 1/2x more mobile phones sold today than PCs; (4) QCOM alone cannot supply the entire ASIC marketplace; (5) ASIC mkt reqs met by other manufacturers ALL result in royalty fees to QCOM * Believe this is a big POSITIVE for QCOM, not negative, which may be initial reaction. Rate QCOM a 1H with $210 price target; would be buyers of stock on weakness. --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/98 EPS $0.29A $0.13A $0.14A $0.27A $0.82A Previous 09/99 EPS $0.30A $0.41A $0.75E $0.90E $2.40E Current 09/99 EPS $0.30A $0.41A $0.75E $0.90E $2.40E Previous 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Current 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Previous 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Current 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (8/2/99)......:$152.50 P/E Ratio 09/99.....:63.5x Target Price..:$210.00 Prior:No Change P/E Ratio 09/00.....:38.1x Proj.5yr EPS Grth...:44.4% Return on Eqty 98...:48.9% Book Value/Shr(99)..:7.01 LT Debt-to-Capital(a)0.2% Dividend............:$N/A Revenue (99)........:3649.00mil Yield...............:N/A% Shares Outstanding..:159.0mil Convertible.........:No Mkt. Capitalization.:24247.5mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION:------------------------------------------------------------------ Motorola, which has already been paying QUALCOMM royalty fees on its CDMA infrastructure and handset sales, will soon be manufacturing CDMA ASICs, adding yet another royalty stream to QCOM. In fact, today, Motorola announced at its analyst meeting that it would be manufacturing CDMA ASICs (chipsets) as well as the CDMA phones and network gear it currently makes. We believe MOT's potential entry into the CDMA ASIC marketplace could potentially be a boon for QCOM for several reasons: --Most, if not all, 3G phones will be CDMA based --5 Billion mobile phones could be sold over the next 5 years --There's 2 1/2x more mobile phones sold today than PCs --QCOM alone cannot supply the entire ASIC marketplace --ASIC market requirements met by other manufacturers ALL result in royalty fees to QCOM Motorola and Lucent are the only two manufacturers whose licensing agreements with QCOM permit them to manufacture and sell CDMA ASICs for sales outside of their own internal consumption. QCOM has also licensed other manufacturers to produce CDMA ASICs for use in mobile phones. These companies include VLSI, DSP, AKM and PrarieComm. MOT's entry into the CDMA ASIC market is more likely an issue for other ASIC manufacturers than for QCOM, which is currently the leading supplier of CDMA ASICs and likely to remain the leading supplier even as other sources enter the market due to its head start and core technology expertise. MOT's potential ASIC entry is a big POSITIVE for QCOM, not a negative, which may be the initial reaction. We continue to rate QCOM a 1H with a $210 price target and would be buyers of the stock on weakness.

To: DaveMG who wrote (176)	8/4/1999 9:28:00 AM
From: DaveMG	Respond to of 426

Japan Delays Technical Standards for Next-Generation Cell Phone System August 3, 1999 (TOKYO) -- Japan's Ministry of Posts and Telecommunications postponed the submission of technical requirements for commercializing IMT-2000, a standard for next-generation cellular phone systems, until September. In response to the decision, NTT Mobile Communications Network Inc. (NTT DoCoMo) may have to review its commercial IMT-2000 service launch, now scheduled in March 2001. However, a company spokesperson said the firm will stick to its scheduled launch. To offer commercial IMT-2000 services in Japan, mobile phone service providers are required to make their services and systems comply with technical requirements drawn up by the Telecommunications Technology Council, an advisory group to MPT. MPT initially planned to submit a report on the IMT-2000 technical standard in April 1999. However, it decided to postpone the submission until July, considering progress of the IMT-2000 standard-setting process by the International Telecommunications Union. Expecting the submission of the report no later than July, NTT DoCoMo was prepared to start its service in March 2001. As reasons for the postponement, the Telecommunications Technology Council cited the following two reasons: (1) There are several methods to realize IMT-2000. Standardization of one of them, which was planned to be adopted in Japan, has been delayed, so that part of technical requirements for the method cannot be provided. (2) The radio frequency band to be used for IMT-2000 may conflict with that used for personal handyphone systems (PHS). Therefore, restrictions on output of the IMT-2000 terminal and the radio frequency band will need to be re-examined. All IMT-2000 standards to be adopted in Japan will employ a technology called CDMA. These standards will be roughly classified into two groups. direct spread (DS) and multi career (MC). The IMT-2000 standards which use DC-CDMA technology are wideband code division multiple access (W-CDMA) method and wideband cdmaOne (cdma2000) method, and the standard which uses MC-CDMA technology includes the cdma2000 method. The standardization of the cdma2000 method which uses MC-CDMA technology has been delayed. Detailed specifications of this method are currently being prepared by 3GPP2, an international organization for which the U.S. Telecommunications Industry Association (TIA) serves as secretariat. Currently, NTT DoCoMo claims it will adopt the W-CDMA method, not the cdma2000 method using MC-CDMA technology, so that the company is still entitled to start its service in March 2001, as initially planned, despite the postponement of the submission of the report, according to an NTT DoCoMo spokesperson. Japan's largest mobile telecom carrier intends to launch the service as originally scheduled unless future standardization of the cdma2000 method will require W-CDMA method specifications to change drastically. (Nikkei Communications)

To: DaveMG who wrote (176)	8/4/1999 9:29:00 AM
From: DaveMG	Read Replies (1) \| Respond to of 426

Qualcomm Falls as Motorola Looks to Compete in Chips Take notice of the bold from the company. San Diego, Aug. 3 (Bloomberg) -- Shares of Qualcomm Inc., which developed the world's second-most popular wireless phone technology, dropped 8.2 percent after Motorola Inc. said it will make semiconductors for phones to compete with Qualcomm. Qualcomm fell 12 1/2 to 140, its biggest percentage drop since April 19. Even with the decline, Qualcomm is the best- performing stock on the Standard & Poor's 500 Index this year. Motorola, the world's No. 2 cellular-phone maker, told analysts and investors it plans to start selling computer chips next year that compete with Qualcomm's. That could hurt San Diego- based Qualcomm, whose shares have risen more than fivefold this year on expectations that profit will surge with sales of chips and royalties from companies that use its technology. ''Motorola is a competitive threat to Qualcomm,'' said Brian Modoff, an analyst at Deutsche Banc Alex. Brown, who rates both Qualcomm and Motorola ''strong buy.'' Motorola, of Schaumburg, Illinois, said it will begin shipping the chips in large volumes in the first half of next year. Qualcomm sold 11 million of the chips, which use the company's code-division multiple access technology, in the quarter that ended June 27, helping it post record sales of $1 billion. CDMA offers more capacity on cellular networks than competing standards and is considered more efficient for data services like e-mail and Internet surfing. Qualcomm 'Not Concerned' Qualcomm, which developed CDMA, licenses the technology to other manufacturers and also makes chips for network equipment and phones that use the standard. Motorola, which makes both CDMA phones and network equipment, already makes the chips for its own gear. Today, the company said it will also sell the chips to other manufacturers. Motorola shares fell 2 1/8 to 90 3/4. Qualcomm, which still will receive royalties on all CDMA phones -- even those with Motorola chips -- downplayed Motorola's announcement. ''Financially, we're not concerned about the effects of this,'' said Richard Grannis, the company's vice president and treasurer. ''If it boosts the overall CDMA market, then that's good for Qualcomm.'' One thing helping Qualcomm is the time it will take cell- phone makers to adjust their models for chips from a different manufacturer. ''There's a significant lead time required for the phone manufacturer to adopt the changes,'' Grannis said. ''You might not see a phone with the chips until late next year, even if Motorola had a product ready today.'' Qualcomm's customers include Samsung Electronics, Sony Corp., LG Electronics and Toshiba Corp. The company said four other chip producers are licensed to provide CDMA chips to cell- phone makers. ''We've always expected others to introduce viable chips,'' Grannis said.