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

To: Ibexx who wrote (6876)	2/25/2000 1:20:00 AM
From: Bux	Read Replies (1) \| Respond to of 13582

Thanks, Ibexx, but you left out my favorite part. We do not believe that this activity is part of China?s tactics for renegotiations royalty rates with QUALCOMM. QUALCOMM had gone through months of negotiations with China during which the Chinese government was very involved and had given its approvals. Furthermore, one of the specific terms set by QUALCOMM in awarding China with a lower royalty rate was that China Unicom would need to deploy a network to support 10 million subscribers by the end of 2000. Any delay in this would affect the lower royalty rate offered. We also believe that China Unicom would not want this setback and would not want to be behind in 3G deployments as well. Ericsson has been notified that a new date for bidding process would be set shortly. We believe that this postponement should only be temporary. Our estimates remained unchanged-our China estimates have been conservative. Our model reflects the opportunity in China, though we are still on the conservative side adding only 1.5 million Chinese CDMA subscribers to fiscal 2000 and 7 million subscribers to fiscal 2001 numbers. We recognize the political risks associated with China but we do not see this activity affecting our current estimates. The opportunity in China could be large and completes CDMA's encirclement of the Pacific Rim. While the initial ramp in China may be slower than the immediate 10 million new subscribers projected by China Unicom, the market still presents outstanding opportunity. The wireless subscriber penetration in China (approximately 3%) is very low compared to other markets such as North America (approximately 30%) and China has four times the population. Our thesis on QCOM and CDMA remain intact - Reiterate our STRONG BUY rating. We believe that China will deploy CDMA based on the technology's spectral efficiency and cost benefits. CDMA is the fastest growing wireless digital standard in the world, competing with GSM technology for global network deployments. CDMA is considered the best digital wireless technology in terms of capacity, sound quality, and data throughput with a projected 5-year CAGR of 74%. Fast product cycles in CDMA only help to strengthen QCOM's ownership of the handset as well as challenge slower evolving GSM technologies. Bux