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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: saukriver who wrote (75964)	7/9/2000 8:46:03 AM
From: William Hunt	Read Replies (1) \| Respond to of 152472

From Raging Bull---QUALCOMM INCORPORATED [QCOM] "STRONG BUY" 07/07/2000 Modoff, Brian T. 415-477-4237 Jayant, Alin 415-617-3334 Deutsche Banc Alex. Brown ------------------------------------------------------------------------------- QUALCOMM INCORPORATED [QCOM] "STRONG BUY" We note the following regarding today's newspaper articles ------------------------------------------------------------------------------- HIGHLIGHTS: We note the following from today's news articles: -- In our view, the Bloomberg news article is wrong in stating that Korea's biggest operators plan to use WCDMA only. -- Korea is in the process of awarding 3rd generation licenses to three carriers. Applications will be submitted in September, licenses issued in December. -- So far, only SK Telecom has stated their plans (deploy CDMA2000 in its SK Telecom network and WCDMA in its recently acquired smaller Shinsegi Telecom network). SK Telecom will need to get government approval to deploy both standards. SK Telecom is in the process of deploying 1XRTT (CDMA2000 Phase 1) into their network - the first step in their 3G strategy. -- Korea Telecom's decision is unclear - yesterday, Bloomberg news ran a story stating that Korea Telecom would use CDMA2000, today they are correcting that story and saying that Korea telecom will deploy WCDMA. Korea Telecom (when combined with Hansol) is the second largest carrier behind SK Telecom. -- The other operator, LG Telecom has not made any official statements regarding its 3G plans, but we believe they are currently favoring WCDMA. -- Qualcomm benefits the same in terms of royalties regardless of which version of mobile CDMA an operator chooses to deploy (CDMA, WCDMA, etc). A number of vendors including Samsung, LGIC, Hyundai, Ericsson, Nortel, Lucent, Philips and Hitachi have already signed licenses for CDMA2000 and WCDMA with Qualcomm paying the same royalty rate regardless of standard. -- Qualcomm has a strong market share of CDMA-IS95 chipsets (growing stronger with upcoming 1XRTT deployments) and is benefiting from the growth of CDMA networks in Asia and the Americas (and should benefit from CDMA2000 network deployments) -- What is unclear is their market share for WCDMA chipsets. We believe that the company will start to unveil their WCDMA chipset strategy this quarter. Given Nokia and Ericsson's focus on this market, Qualcomm will likely be more challenged for market share of WCDMA chipsets. Our current forward earnings model takes a more conservative stance regarding this. -- Still, we believe that independent of the choice of W-CDMA or CDMA2000, Qualcomm is the company best positioned to translate CDMA-based algorithms into silicon. CDMA (and its evolution) is intrinsically a very sophisticated radio technology and QCOM has spent several design cycles optimizing both algorithms and gate designs to deliver this technology to consumer devices which puts it ahead of the curve in delivery of these chips to the 3G market. -- Our view remains unchanged - We believe that the company is well positioned to benefit from the pending carrier upgrades to 1XRTT technology starting in CYQ4 in Korea, 1H/01 in the US and 2H/01 in Japan. Further, our model show an accelerating revenue and earnings trend going into 2002 as carriers commence the buildout of WCDMA networks in Europe and Asia. We view the current share price weakness as an opportunity to build a position in the stock in front of these events. We maintain our Strong Buy rating. BEST WISHES BILL