Transcript of Ed Snyder and Mark Roberts June 1 2000 CNBC
Host - Edward, let me begin with you, will the CDMA Technology from Qualcomm be deployed in China?
Ed - No, I don't think it will be, actually I think the inertia behind the competing system, which is a GSM system, has being built up over the last few years is such that deploying a CDMA system at this point, Qualcomm's system, is actually a moot point, you would not be able to roam with it and I think that China Unicom has pretty much acquiesced that, in that they going to continue to build out their GSM business.
Host - Well let me ask you, Mark, already GSM is widely used in China, why would the Chinese Population switch to CDMA and Qualcomm?
Mark - Well, I believe that they have no choice but to go CDMA because upon investigation the spectrum that they have is too small to continue to deploy GSM and the Qualcomm version of CDMA known as WCDMA, which many people mistakenly believe is not Qualcomm's technology, is also can not be deployed there. So we have talked to a number of manufacturers as well as with contacts within China, that believe that China Unicom, on their new spectrum, will have no choice but to deploy a nationwide CDMA network, and we believe that's exactly what they plan to do.
Host - Ed, China Unicom has already said that they will be deploying the Technology, are you speaking to different manufacturers?
Ed - No, we are not, as a matter of fact. China Unicom said they will deploy the GSM Technology, the wide band CDMA that Mark refers to, is actually an upgrade that may or not be deployed in the future, but as we sit today , they are adding over about 1.5 million subscribers a month to the existing GSM subscriber base and that has been going on for two years. And that winds up being one of the largest customers for all of the big OEMS in the basic GSM structure. So I think that China Unicom is going to get on the bandwagon and expand their existing GSM business. And wether or not WCDMA is something that we will see maybe in two or three years but nothing that is going to impact Qualcomm in the short term.
Host - So Edward, you are saying Mark is wrong?
Ed - I think that whether or not WCDMA is even deployed in China or not, is a moot point for Qualcomm today. It has been trading down on a number of bad pieces of news, China is just one of them, the Korean subsidy cuts is another and the penchant for a number of their existing customers like the Japanese carrier, DDI, to go to the European Standard, is the third, so I think that Qualcomm is facing a BIG headwind in a number of areas and that is going to play on the stock over the next quarter or two.
Host - Mark?, you are saying Edward is wrong?
Mark - Yes, that is factually untrue, all of the Japanese CDMA carriers that are currently using CDMA have already announced that they plan to deploy the next generation of CDMA known as CDMA 1X, which by the way, is the only international Telecommunications Union approved 3G standard at this point, as well as most of the Korean carriers have already announced that they are going to deploy the next generation of CDMA technology, and I believe the Ed may be confused because the subsidiary that is going public, which is a Hong Kong subsidiary of China Unicom, has existing GSM spectrum that they are going to continue to build out. The agreement that Qualcomm has with the Chinese Government and with China Unicom, the parent company in China is for new spectrum where GSM can not possibly deliver the kind of capacity that they need.
Ed - I would suspect that there is some confusion but I don't doubt that is among the Japanese DDI and IDO uh carriers. What Mark is referring to is the announcement two week ago that DDI would deploy Qualcomm's intermediate technology,. but three days prior to that they indicated that they would go with the European GSM technology, which by the way, covers 55 % of the globe now, if you add into that the existing American TDMA technology, which is the cousin and has the same upgrade path to the European system, clearly 70 percent of the business is going to go --
Host- I just want to ask you about the valuation, the stock is down 53 per cent only in about three months, is not all the negative news already priced into the stock now?
Ed - No as a matter of fact it is not. What you see still and Mark would know this as well as anyone, there are a number of very strong buy ratings remaining on the stock. With the Korean subsidies cut , subscriber growth from Korea is going to drop off a cliff beginning in June , we have people in Korea the last two days talking to the carriers who are apoplectic about prospects for growth there. A large portion for Qualcomm's revenue goes into that and you are going to have to see revisions and guides from the company down.
Mark - No that's factor , I talked to Qualcomm earlier, most of the Korean manufacturers are hoping that --
Host - Got wrap it up.
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Ed Snyder (415)371-4065 esnyder@hamquist.com
Mark Roberts First Union
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Note - No guarantee on the accuracy, best effort. I would like corrections but especially comments on the statements made. |
