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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (38461)	8/22/1999 1:37:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 152472

JohnG, I couldn't have said it better. eom

To: JohnG who wrote (38461)	8/22/1999 2:35:00 PM
From: slacker711	Read Replies (2) \| Respond to of 152472

Could Q really have done better & are component shortages that bad. My experience is that shortages prevent price cutting and price deterioration really hurts margins. I think that this would be true if the Q was only a handset manufacturer. Since they collect royalties on every phone sold and also supply somewhere around 90% of the chipsets, I think that the Q would be hurt badly by any prolonged component shortage. I guess I will be the first to say this....if the component shortages are bad enough, it has to be a possability that the Q would miss this quarter's whisper numbers (whatever they may be). Just an outline of my concerns..... 1) The latest Lehman report that I read had stated that the Q was aiming for sales of around 1m handsets a month by the end of the current quarter. If component shortages constrained production to the same rate as last quarter I would think that this would reduce current margins. The Q must have scaled up their lines, ordered more parts, and hired more people in preparation for the increased production. These expenses would still appear even if the Q didnt end up making the 1m phones. 2) Part shortages would also hit the various other handset manufacturers, who in turn would place fewer orders for ASIC's. 3) The decreased supply of CDMA phones would slow total subscriber adoption. This would lower the rate of growth of royalties. The latest numbers from Korea showed that sales in July were at a record pace but that they had week long waiting lists for phones. That wont matter as much in Korea where all carriers are CDMA but if the same thing happens in Japan or the US, consumers may simply switch to a different carrier (AT&T or NTT Docomo). One other observation about this quarter's earnings....the sales and marketing component of expenses was at 50m versus 64m from last year. I believe that an analyst asked about this during the conference call....the response from Jacobs was that the quarter was a little low and that it would be returning to more traditional levels (does anyone else remember this?). The magazine ads and future television ads could also impact the 4q performance. Now, do I actually think that they will miss? No, not really, but I do have to face the possability. Slacker