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

To: waverider who wrote (95338)	3/7/2001 10:53:32 AM
From: foundation	Respond to of 152472

OPINION ---- Late last night we received February's subscriber numbers from South Korea. The two most important items to come out of this report were that gross additions, the best indicator of overall mobile phone sales, increased 51% month-over-month and SK Telecom's market share decreased. Although net subscribers declined for the third straight month (65K in February vs net declines of 71K in January and 79K in December), we believe the strong increase in gross subscriber additions (734K in February vs 485K in January) indicates solid mobile phone sales in South Korea over the past month. We believe the net subscriber contractions South Korea has witnessed over the past few months is a result of SK Telecom's efforts to reduce its market share to the government mandated 50% level by the end of June 2001 and KT Freetel's efforts to clear its sub base of non-paying customers. During February SK Telecom was able to reduce its market share to 53.7% from 54.1% at the end of January. SK Telecom is required by the Korean government to reduce its market share to 50% by June of 2001 as part of the government's agreement to its merger. As a result, SK Telecom, which is the largest CDMA operator in Korea and runs the only live 1XRTT network, cannot aggressively market its CDMA or 1XRTT services for fear of not reducing its market share in time. Once SK Telecom's market share reaches 50% it satisfies its merger conditions and is no longer required to maintain a specific market share level. Therefore, the sooner SK reaches the 50% market share threshold, the sooner it can aggressively market its CDMA and 1XRTT services and the sooner we expect to see a benefit to Qualcomm in terms of ASIC sales and royalty revenues from handset sales. We expect to see a strong ramp in 1XRTT ASIC sales and mobile phone royalties in the second half of 2001 as SK Telecom should be able to effectively and aggressively market these services as well as the scheduled network launches from KT Freetel, LG Communications, KDDI, Sprint PCS and Verizon. Although we remain cautious with respect to the wireless equipment industry due to the impact of an UMTS delay and overly aggressive handset forecasts by the larger suppliers, we believe Qualcomm is best positioned to outperform given: it has already started to benefit from 3G (1xRTT and initial royalties from WCDMA in Japan); the strong outlook for CDMA in 2001; and the majority of the handset risk currently in the marketplace is from GSM and Europe, where QCOM has limited, if any, exposure. We reiterate our Buy (1-H) rating. ssb, this morning ---------- "..Although net subscribers declined for the third straight month..." I wonder if this is what the market, and less gifted analysts, are keying off of as catalyst for this morning's weakness?? This prospect makes sense to me.... An earnings miss or lowering of guidance is being priced in. As the story: "Forced cancellations of mobile telecom services rising rapidly" Message 15460539 suggests, there are curious games being played between Korean carriers at present. I wonder if these games may extend to comments concerning their respective 1x networks and technology, as perhaps evidenced by recent stories (such as a carrier declining to publicly preview VOD capabilities because a competing carrier announces it will as well). Anyone familiar with liar's poker? ben

To: waverider who wrote (95338)	3/7/2001 11:01:39 AM
From: qveauriche	Read Replies (2) \| Respond to of 152472

Rick- If CDMA demand is indeed softening, such that Q has to warn, I agree that we could see significant downside. But an 01 softening of demand in the midst of an economic slowdown in a 2g GSM dominated world is absolutely irrelevant to the outcome of this story over time. There are also any number of stories that could appear on the screen any day that could permanently move the stock up from these levels. These include the actual letting of contracts in Chiner, an announcement by Nextel of its choice of CDMA 2000 for 3g, or positive CDMA developments in India and Latin/South America. Later in the year, we will have the "interesting" (Dr. J's word, not mine)competition between carriers deploying CDMA 2000 and those who are not in Japan (Docomo could really be a fatted calf here for KDDI), South Korear, and the U.S. In short, we could really take a fall from these levels, but certainly not for good, and we could also move significantly north for good depending on news flow. For those with the objective of owning the stock at the point of fruition, this is no time to sell. For those who may need their money in the next 12-18 months, or who are on margin, this is not the stock to own. If you consider this perspective unbalanced, I would welcome your input. Best regards.

To: waverider who wrote (95338)	3/7/2001 1:08:05 PM
From: LarsA	Respond to of 152472

Rick, good point: "Everything that happens is always twisted around as a positive for QCOM". I would find it very helpful if we could also discuss negative events without the feeling that the thread sees it as being a betrayal of QCOM. An example: IJ's, in my humble view desperate and counterproductive, move in Cannes to suddenly push for CDMA 2000, using terms like ready now, revenue next year etc when there is just about no commitment from major handset vendors, major investments already in place all over Europe for the GPRS-WCDMA path. To me that was a shift in attitude from IJ that worries me. I bought QCOM for their WCDMA IPR and I hope the revenue is not so time critical that a typical new-technology delay is severely damaging. Sorry, I'm really only in this game for the money...