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Technology Stocks : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: patrick tang who wrote (20518)	11/1/1999 2:01:00 PM
From: DWB	Read Replies (2) \| Respond to of 25814

Patrick, "Two months ago, news out of Korea (in eetimes I believe) was that Korea was seeing and giving business to QCOM's competitors because their chip set prices were 30% below QCOM's. If QCOM has to lower prices to retain market share, I doubt their bottom line will hold up." If I'm not mistaken, those chips are expected to be used on the more "generic" handsets that will be coming out in the near future. The higher margin handsets will predominantly continue to use QCOM chips. Plus, it's already assumed that QCOM's current 90% market share of the CDMA ASIC market will drop to 50-60% in the next few years, even by their most bullish proponents... for the simple fact that the market is exploding. "Also, I doubt that the lisc. fees are that huge. For the whole world to adopt QCOM's [sic]CDMA standards (China, Japan, Korea, Europe ...), QCOM has to convince all the governments that their CDMA standard is sort of an open standard with very low lisc. fees. Remember China was the last holdout in adopting that standard by threatening to develop their own standards? I doubt that China or any of these government would willingly hand over the power to a monopoly without some kind of guarantee that both the cost of product would be competitive because of availability of different suppliers and that they one day may also develop their own chips within their own countries without having to pay exuberant monopoly type lisc. fees." The threat by China to develop their own standard is... how shall I say this... not-compelling. If Ericsson, who was the biggest anti-CDMA company in the world, tucked tail and is paying QCOM, the government of China doesn't have a prayer. If they don't want to use it, fine... but I don't think they'll be developing the technology on their own any time soon. Stealing it is another possibility though... And despite the fact that everyone brings up QCOM's licensing/royalty fees, GSM (which is used by even more countries/companies for 2G wireless) is even more expensive in that regard for a company without offsetting IPR. QCOM can have single digit licensing/royalty returns, and still make more money than they know what to do with... "QCOM may do just that, but I don't want to bet my own money on that." I'll bet you that over the next 1-2 years, QCOM stock will outperform LSI from this point forward.... and those are my 2 largest positions by far. DWB