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To: Sully- who wrote (21109)	11/30/2000 2:06:51 PM
From: T L Comiskey	Respond to of 65232

Q thread stuff First Union Securities Covers QCOM By: First Union Securities 11/30/00 9:52:40 AM Morning Notes: Visit the CNET Brokerage Center for daily reports from the top Wall Street analysts. QCOM: HYUNDAI’S CDMA WLL CONTRACT IN INDIA - REITERATE STRONG BUY QUALCOMM, Inc. (QCOM-NASDAQ) PRICE: $82 5/8 52-WEEK RANGE: $200-22 KEY POINTS About two weeks ago, Hyundai Electronics announced that it had won a $120 million contract to supply QUALCOMM-based CDMA wireless local loop (WLL) equipment to India’s Department of Telecommunications Services. In a press release, Hyundai stated India’s plans to deploy 200 million WLL lines by the end of 2001. In our note of November 17, 2000, we were skeptical that 200 million lines could be deployed that fast. We suspected that either the date or the number of lines might be wrong. Since then we have learned, from a Hyundai representative, the original press release contained errors. Here’s what we know to be true so far: -- The initial contract is for 150,000 lines @ $120 million - as originally reported. -- The actual WLL CDMA equipment is being bid by Hyundai at around $225-250 per line, not $800 per line as could have been inferred from the initial press release. The difference represents switching equipment that must be put in central offices (COs). -- The expected follow-on business for 2001 is 1-2 million lines, not 200 million lines as reported in the original press release. Misunderstanding was the reason given for the error. It is unclear to us whether Hyundai representatives estimated follow-on business in India by counting dimpled chads or not. -- Hyundai now says the total expected WLL line deployments in India over the next several years are expected to be around 5 million lines. We believe given the low teledensity in India their estimate could be very low. Implication for QUALCOMM: Still incrementally positive, in our opinion. We now estimate the implication for QCOM is about $90-95 million pretax or about $0.08 per share over, say, 2-3 years. However, we do know that India has nearly 1 billion people with among the lowest teledensity in the developing world. To bring India up to the teledensity (phone lines per 100 people) of, say, Korea, Singapore or Israel would require the deployment of several hundred million lines at least. QUALCOMM management has been consistently very conservative in their assessment of the WLL CDMA opportunity in India. Hyundai representatives are typically very helpful and accurate in their information. We suspect what happened with the original press release was just human error that sometimes occurs in a big corporation like Hyundai. WLL is largely a narrowband system that has most of the features of cellular except for the ability to roam and hand-off. WLL is cost effective and quick to deploy in areas where deploying traditional wireline phone networks would be time consuming and cost prohibitive. WLL is not really competitive in developed countries with highly developed wireline infrastructure – those markets are moving to more broadband data networks. Despite the share price approaching our conservative $90 price target (using our modified CAPM), we reiterate our Strong Buy rating on the shares. We suspect that there are more good news announcements coming over the next few months that could change the risk profile of the company’s earnings, resulting in multiple expansion and a higher long-term earnings growth rate. Additional information is available upon request. First Union Securities, Inc. maintains a market in the common stock of QCOM. An author of this note owns stock in QCOM. QUALCOMM is on the Analyst Action List. This is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments mentioned. Interested parties are advised to contact the entity they deal with, or the entity that has distributed this report to them. The information has been obtained or derived from sources believed by us to be reliable, but we do not represent that it is accurate or complete. Any opinions or estimates contained in this information constitute our judgement as of this date and are subject to change without notice. First Union Securities, Inc. (“FUSI”), or its affiliates may provide advice or may from time to time acquire, hold or sell a position in the securities mentioned herein. FUSI is a subsidiary of First Union Corporation and is a member of the NYSE, NASD and SIPC. Copyright © 2000 First Union Securities, Inc. FUSI is a separate and distinct entity from its affiliated banks and thrifts.SECURITIES: NOT FDIC-INSURED • NOT BANK-GUARANTEED • MAY LOSE VALUE