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

To: Getch who wrote (78962)	8/24/2000 12:22:58 PM
From: Getch	Read Replies (4) \| Respond to of 152472

As this may be stock price related, will post this here to avoid possible moderated conflict. Why has QCOM chosen to spin off its chip related business at the exact time of this divisions weakest financial performance? Had a long conversation with a good friend about this yesterday. Would like to get more thoughts about this, as it is most likely going to be the largest event for QCOM in the next few months. I am working at becoming better at knowing how to access company numbers and past posts, but not yet to GG thread level. Spinco has had relatively flat performance in recent quarters, and this quarter expectations are for a sequential decline. Not exciting times for an IPO. Spinco is at the end of a product cycle (IS-95A and IS-95B), with the pressure of lower ASP associated with that end of cycle. Spinco is at maximum development costs of the next generation chips, with trials of both 1X and HDR in progress around the globe, yet no revenue. From EE Times: Currently ramping for production shipment, the MSM5000 is designed to give operators up to twice the overall capacity available over IS-95A and IS-95B systems The CSM5000 solution is now sampling, and production shipping is expected in the fourth quarter. Sample shipments of the MSM3300 and IFR3300 began this month...Production quantities of the MSM3300 and IFR3300 are expected to be available in the fourth quarter. eetimes.com Combine these factors with the ban on Korean handset subsidies, and we have the makings of poor financial quarter for Spinco. So why do it now, when much better quarters lie directly ahead? A.) Negotiations with the GSM world have reach a critical point, so that the decision to delay the IPO until there are better financial conditions for Spinco would hinder these negotiations. The potential for reaching a positive resolution must be greater than than risk of a poor performing IPO, or else it would make more sense to delay the IPO until early next year when the new chips, with a (presumed) high book-to-bill and increased ASP will be shipping in quantity. I see the short term success or failure of the IPO being near completely announcement driven. Without news...Spinco is not exciting, at the end of a soft cycle. With news of a GSM agreement... It will be interesting to see what comes out in the pre-IPO dog and pony show.