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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: John Biddle who wrote (3613)	11/25/1999 2:06:00 PM
From: Ruffian	Respond to of 13582

A Couple of Angles From A Yahoo Post> Just to bring you up on current events, both Nokia and Motorola have publicly acknowledged an interest in acquiring QC's handset operation. QC itself has disclosed six bidders. You have no visiblity into the prospective product portfolio. During Qualcomm's November conference call, management explicitly stated that the buyer would pay 'market royalties' and have to agree to purchase ASICs from QC. So...the company turns a money losing operating into a royalty and ASIC stream...sounds pretty damn accretive to me. Neither MOT nor Nokia has issued a press release, but their investor relations departments have acknowledged their interest to the financial community. Based on their comments, two weeks ago, Salomon's Alex Cena issued a report illustrating the accretion that would accrue to Nokia or MOT where they to acquire the business. Your analysis misses the following:(1) Both MOT and NOK have substantial purchasing economies relative to Qualcomm. Each could immediately reduce the business' component costs. (2) Since both MOT and NOK have existing sales and marketing infrastructure, they would be able essentially eliminating Qualcomm's marketing expense (again, substantially increasing margins). (3) CDMA phones are NOT the rank commodities that you perceive them to be. It takes a long time (up to twelve months) to qualify a phone with the service providers. Qualcomm's designs (and thus its market share) is far more protected that you perceive it to be. Moreover, both NOK's and MOT's proprietary ASICs have proven problematical in the field. MOT solved this problem by purchasing QC ASICs (through Pantech); NOK has yet to fix the problem, so it has yet to capture significant US CDMA marketshare. (4) both MOT and NOK are scared poopless that somebody well capitalized and committed to CDMA will buy the business and leapfrog them. SCALE is an important barrier to entry and Qualcomm's handset business could provide immediate scale to a number of Japanese, Korean or even European competitors.