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

To: engineer who wrote (4502)	12/23/1999 1:24:00 PM
From: gdichaz	Read Replies (3) \| Respond to of 13582

engineer: The beauty of this agreement is that KYO and the Q can both ramp up the pressure of CDMA data upgrades moving toward CDMA 2000 in Japan and make NT DoCoMo 's reliance on WCDMA vaporware even more dangerous to NT DoCoMo. See this as making the place where WCDMA was to have been launched first, much less likely of success. The market place may decide in Japan long in advance of the feeble nascent WCDMA attempts in Japan, by leaving DoCoMo in the dust. Would value your opinion. Chaz PS And wasn't Europe looking to Japan for allies on WCDMA? That alliance looks shot to me. So WCDMA is a weaker reed today to lean on than it was two days ago (and it was pretty weak then). A major plus for CDMA 2000.

To: engineer who wrote (4502)	12/23/1999 1:53:00 PM
From: Ramsey Su	Read Replies (5) \| Respond to of 13582

here is another opinion on the deal, from someone who is too shy to post himself: Some thoughts on the Kyocera deal: You are right about management having a track record of doing the best deal possible. Financially and strategically this deal is a winner. Financial - this part is easy, it is just plainly very accretive. Kyocera takes over all of Q's inventory and commitments. So using last quarter's run rate, they will likely make 8 million phones for the North American market in the next 12 months. Q will get about $10 each royalty, and about $10 or $12 of ASIC margin contribution that they would not have gotten with the phone division as a breakeven internal operation. That's about $170 million added to pre-tax earnings, not counting interest earned on the cash part of the transaction and on whatever additional working capital will be freed up. These are rough numbers, but I figure it adds at least $.50 to $.60 to after-tax EPS in the first twelve months (all pre-4 for 1). But that is just the beginning. Kyocera is going to be a big factor in the Japanese cdma market, which will probably grow by an increment of 10 million units next year. The 70% figure for ASIC sourcing in the contract is just a minimum - Q will get more as KYO's old models are phased out. I don't know how many cdma phones KYO will sell outside of North America next year, but I would be willing to bet it is comparable or actually MORE than Nokia WORLDWIDE. So who would we rather have that ASIC contract with in year 2000? Moving forward everyone seems not to hear Irwin when he keeps emphatically (for IJ) repeating that he thinks we will see very, very rapid deployment of 1X by all existing cdma operators as soon as it is commercially available. And lo and behold this morning's press release announces the 1x MSM and CSM will sample starting next month. Last night IJ told us that it is possible that the first commercial deployment could be in place by the end of next year. Now, will NOK have a 1X chipset ready and designed into their phones by this time next year? Will they want to be seen as the cheapo, less-than-full-featured, also-ran, competitor in North America? Prediction - By 2001 they will be buying Q chipsets, so we will have NOK and KYO by then. If HDR then gets implemented by select carriers during late 01 and into 02, who do you think is going to be supplying the chips to NOK's high end phones? Does Kyocera vs. NOK provide an edge when China starts full scale deployment? I don't know, but I bet Irwin does and that he took that into consideration. The employee part is the best part of the deal. Think of it, hundreds of talented cdma and RF engineers (not to mention management and marketing types) that Q will still have available to it after the 3 year term of the contract agreement if they want and need them. These folks are already in great demand. What do you think it is going to be like three years from now when the market is much, much bigger? Who knows what kind of design talent Q will need three years from now. This way their alternatives are preserved, the engineers stay happy, and the customers (very, very, important) stay happy. It is a good deal and there is no reason for anyone to be disappointed, least of all in management. Congratulations Q, another rabbit out of the hat.