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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (2623)	11/3/1999 10:51:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

That's the rub, Slacker. If you believe that Samsung will remain a leader, Qualcomm chipset outlook is good. But if you believe that its position is being eroded, the outlook is not so good. The real competition in the CDMA phone market started this summer. This quarter is the first one that gives us a peek on how the competitive environment is changing. Most people favoring Qualcomm have tried to write off the challenge from Motorola and Ericsson. They have argued that these companies are not making much progress in selling CDMA handsets with non-Q chipsets. So why was Q chipset sales growth at this level? Why did Qualcomm have to resort to steep price cuts to move their phones? The most likely explanation is that Nokia and Motorola are taking market share as fast as they can ramp up production. You can argue that they are not doing so well - but the numbers don't back you up. I don't know what is Qualcomm's current chipset market share. But it is coming down fast and hard. You can always shrug this off and point to the licensing income. But I don't think the current P/E ratio will tolerate underperforming chipset unit in the long term. The great profitability of the chipset unit is not the question - the question is whether that profitability can coexist with rapidly declining market share. Tero

To: slacker711 who wrote (2623)	11/3/1999 1:15:00 PM
From: DaveMG	Read Replies (1) \| Respond to of 34857

I don't know how "alarmed" one should be about ASP erosion in chipsets. Q still managed impressive margin growth despite price erosion. Of course prices are plummeting, volumes are exploding. Q has made it clear they can't compete in the handset game, that without royalties advantages they're in fact losing money. Presumably the buyer will be a larger manufacturer, somebody who brings economies of scale to component buying. Is Q gonna make deal without an ASIC arrngement? I doubt it. Tero...Lets talk about Q's weakness when we see who the buyer is. At that point we might have some "real" info...