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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: t36 who wrote (23187)	4/21/2000 12:12:00 AM
From: Mike Buckley	Read Replies (4) \| Respond to of 54805

Sue, I realize you don't like to post, but I wonder if I could twist your arm enough to convince you to be more specific about the concerns expressed in that article. An investor has to really be able to read in between the lines and keep up with the news about Qualcomm when evaluating articles such as that one. Example #1: "Leading brokerage firms have lowered their market share estimates for Qualcomm. Merrill Lynch [MER] estimates Qualcomm's share of the CDMA chip market will drop from 90% in 1999 to 50% by 2003." Yep. They sure did. That's because they got that guidance from Qualcomm mangement. Whereas the novice reader could infer from the article that this is new news, it's really very old news. And isn't that what Gorilladom is all about, controlling 50% of a huge, world-wide consumer-based market? If that's a problem, controlling "only" 50% of it, that's a problem most companies would die for despite the fact that we can cite a few examples of greater control in other industries. Example #2: "For example, Ericsson and Motorola, among others, are developing rival technologies in an attempt to neutralize Qualcomm's ability to leverage its patent to secure high royalties..." The operative words in that sentence are critically important. It says those companies are "developing" technologies, not that they have developed technologies. It also says that they are doing that in an "attempt" to minimize payment to Qualcomm, not that they have become succesful in doing so. Example #3: "... only 40 million of the 220 million units sold in 1999 used the CDMA platform, representing less than 20% of the available market." Most people objectively assessing that would write that it's absolutely amazing that CDMA has already captured 20% of that market in such a short period of time. Example #4: " 'Qualcomm will not get rich off of Ericsson,' says Ericsson spokesperson Kathy Egan." There was also an Ericsson CEO who said CDMA would never work. The truth is that if Qualcomm does ever become rich off of Ericsson, Qualcomm management would have the class never to admit it. That's not the kind of thing a class act publicly throws in the face of a major partner. Perhaps most important is that you are wondering if the critical elements in the article address characteristics of Gorillas. In my mind, the article's primary points had to do with trying to justify certain analysts' assumptions and thus the valuation of the stock. Valuation of the stock and characteristics of gorillahood have little in common. Hope this helps. I hope others respond. --Mike Buckley

To: t36 who wrote (23187)	4/21/2000 12:23:00 AM
From: Eric L	Read Replies (1) \| Respond to of 54805

Sue, << article on the qcom thread >> Good post to transport to this thread. << thought the idea of qcom being a true gorilla meant it had a stronger hold against competition..does that mean we have to reevaluate our definition of gorilla with respect to qcom?? >> The thread consensus is (I believe) that Qualcomm is the gorilla of CDMA, not the gorilla of wireless space overall. There is no real doubt that with their proprietary open architecture they dominate this space and by all metrics we can measure, 2nd generation cdma is still an a stage of hypergrowth, and QCOM has no challenger here that I am aware of. Their business model, has of course changed and that needs to be constantly watched and reevaluated. All 3rd generation wireless will be based on the CDMA air interface. Some battles are being waged over whether or not QCOM has sufficient IPR to sustain its gorilla status and royalty stream when the 3G tap turns on (several years out) and allow QCOM to also be the dominant ASIC supplier for CDMA chip sets. I currently believe that QCOM is well positioned to maintain both there IPR position and in chip set design against competitors mentioned in the article. I might add, however, that ongoing analyses of this is advised, and several thread members contribute to this diligence. Others might wish to comment more specifically on the article itself. - Eric -

To: t36 who wrote (23187)	4/21/2000 10:30:00 AM
From: straight life	Respond to of 54805

"First: Piecyk's analysis assumes 3 billion mobile phones and other wireless devices by 2010. Based on current population/demographic growth patterns, this would imply that one of every two people inhabiting the planet would have a wireless device. This assumption is not supported with any sort of credible empirical data. What Piecyk has failed to consider is the average per-capita income required to reach such an estimate. "First..." What BS. I'm only one person; yet I own 3 cordless phones... crazy, huh? Couldn't happen... it's like owning more than 1 tv... how could you when you only have 1 pair of eyes? CDMA wireless is and will continue to spread like wildfire; even now through telematics it's spreading into automobiles (BAM & GM); computers will be among the next new markets. The whole article is short sighted FUD. But I guess that's how opportunities for terrific purchases are generated.