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Technology Stocks : QUALCOMM-The Wireless Wonder in 1999 -- Ignore unavailable to you. Want to Upgrade?

To: GO*QCOM who wrote (167)	3/31/2000 1:13:00 AM
From: GO*QCOM	Read Replies (2) \| Respond to of 343

Wireless Equipment Fundamentals Poised for Further Acceleration Qualcomm Inc(QCOM)* Rating: 2H 2000126 Salomon Smith Barney ~ March 30, 2000 --SUMMARY:----Telecommunications Equipment * Spectrum auctions underway in Europe translate into 4 major catalysts that will occur over next 1-24 mos, driving excitement in wrls equip sector * Order rates & backlog should once again accel to levels not seen since 1995 & 1996 when fundam's turned up due to spectrum auctions in US & Brazil * ERICY one of the most obvious winners along w/NOK, which will receive added benefit of change in perception from a primarily handset play to an infrastrcuture play as well. * Motorola and its partner Cisco are gaining mind share in Europe * AirNet and interWAVE should be huge beneficiries as well * All routes lead to Qualcomm as the biggest winner of all * In short, concentrate on stocks with the greatest wrles exposure. This would include ERICY, MOT, NOK & QCOM as well as smaller stocks ANCC & IWAV --OPINION:------------------------------------------------------------------ Wireless equipment stocks have experienced strong growth over the last few years, but we believe the fundamentals for the group may be poised to, on the margin, accelerate. * Spectrum auctions underway in Europe will translate into four major catalysts that will occur over the next one to 24 months, driving excitement in the wireless equipment sector * In fact, order rates and backlog should once again accelerate to levels not seen since 1995 and 1996 when fundamentals turned up due to the spectrum auctions in the U.S. and Brazil * Ericsson is one of the most obvious winners along with Nokia, which will receive the added benefit of a change in perception from primarily a handset play to an infrastrcuture play as well * Motorola and its partner Cisco are gaining mind share in Europe * AirNet and interWAVE should be huge beneficiries as well * All routes lead to Qualcomm as the biggest winner of all * In short, concentrate on stocks with the greatest wireless exposure. This would include Ericsson, Motorola, Nokia and Qualcomm as well as smaller stocks such as AirNet and interWAVE. We believe there are four major catalysts to drive wireless stocks both on a near- and long-term basis. These are the issuance of 3G licenses in Europe, large contract awards for wireless infrastructure, revenue and earnings acceleration, and finally another acceleration in mobile phones. We recommend a basket investment approach in stocks with a large relative exposure to the wireless industry. Our top wireless stocks for 2000 are Ericsson (ERICY-1M-$85 1/2)#, Motorola (MOT-1M-$143 13/16), Nokia (NOK-1M-$208 1/16), and Qualcomm (QCOM-2H-$145 15/64). For those looking for more aggressive investments in smaller capitalization stocks with faster top line growth potential, we would also add wireless equipment suppliers such as AirNet (ANCC-1H-$34 3/8)# and interWAVE (IWAV-1H-$23 1/16) to our basket. ERICSSON AND NOKIA ARE EARLY BENEFICIARIES Ericsson is the most obvious beneficiary of 3G because of its leadership position in wireless infrastructure, while Nokia will no longer be viewed as just a mobile phone play but as a wireless infrastructure beneficiary as well. We believe the change in psychology on Nokia from primarily a mobile phone supplier to a wireless infrastructure beneficiary as well should result in a tremendous multiple expansion. MOTOROLA AND ITS PARTNER CISCO ARE GAINING MIND SHARE IN EUROPE We believe Motorola, along with its partner Cisco (CSCO-1M-$73 5/8), are gaining mind share amongst the potential licensees in Europe. Since 3G is envisioned to be primarily used for data and the backbone is likely to be ATM and IP, the combination of Cisco's dominant position in the data world and Motorola's expertise in radio technology should ensure a major role in 3rd generation networks. Nortel (NT-1M-$123 1/4) already has a respectable position in European wireless networks so it too should win its fair share. Lucent (LU-3M-$63 1/4)#, on the other hand, has the most to gain and the most to lose since it is a relatively minor player in the GSM world. AIRNET AND INTERWAVE SHOULD ALSO BENEFIT FROM WIRELESS GROWTH Niche players such as AirNet and interWAVE should also benefit from the migration of voice minutes of use from wireline to wireless as well as the beginning of the growth in mobile data applications. QUALCOMM, THE HIDDEN AND THE BIGGEST BENEFICIARY OF ALL 3G NETWORKS A less obvious, but probably the biggest winner in 3G, is Qualcomm because it will collect royalties from every company that plans to manufacture and sell of 3G infrastructure and subscriber equipment based on CDMA technology whether it's CDMA2000 that has its roots in the United States or W-CDMA that has its roots in Europe MOBILE DATA DRIVES 3G Mobile data applications should grow this year as more carriers launch trials of enhanced services, while mobile data could explode to the forefront in 2001. We believe the growth in mobile data will play an important role in driving traffic and obviously in driving infrastructure equipment spending upward.