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

To: pcstel who wrote (99446)	5/19/2001 1:40:06 AM
From: arun gera	Read Replies (3) \| Respond to of 152472

PCSTEL Agree with you that the royalty growth rate for Qualcomm will be difficult to achieve with the falling hardware prices. The unit cell phone unit sales are not going to increase at much faster than 30 percent a year. And if the prices fall every year by about the same percentage, there is little growth in royalties. Assuming the upper limit of 1 billion CDMA phones sold per year in seven years, which is very optimistic, the growth rate for CDMA phones is 38 percent per annum. What about CDMA devices? A typical power user in a few years might have a modem card for a laptop, a data device in the car (a la Wingcast), a data device for the handheld, possibly a data device built into a camera, in addition to a phone. Say 5 devices per power user. And assume 10 percent of the 1 billion users are power users. That brings the numbers to about 0.5 billion devices in seven years (say). Take the remaining 90 percent have an average of one device in addition to their cell phone. That would be about 900 million devices in seven years. There can also be additional commercial devices for business use. Telemetry applications. Security cameras, meter reading, vending machines, traffic monitoring, weather monitoring. Say 100 million of those. (I see a big increase in telemetry applications only if solar energy is sufficient to operate the CDMA data device, then the possibilities are endless, 10s of billions of devices are not out of the question.) We are looking at about 1.5 billion devices. In addition to 1 billion cell phones. 2.5 billion CDMA devices vs about 80 million currently. Average unit growth rate of 60 percent per year. Say ASP falls every year by 20 percent, average royalty increase will be about 28 percent a year. Data device use by power users is going to contribute the bigger growth numbers for the next few years. However,that is not happening in fiscal year 2002. Maybe in fiscal year 2003 we will see growth from devices. So for fiscal 2002, reliance is entirely on CDMA IS-95 adoption and growth. China will help a little. India may help a little in fiscal 2002. Latin America will still see 50 percent growth rate in fiscal 2001 and maybe 30 percent in fiscal 2002. We are pushed to fiscal 2003 for growth in devices and replacement of phones by 1xrt phones. The unknown is BREW. Will Qualcomm really make money off Brew? One comparison is the WAP model by Openwave. WAP servers are sold to carriers for a price. WAP SDK is given away free to dvelopers. Openwave has revenues in the order of 0.5 billion from this business. No net profit yet. Arun

To: pcstel who wrote (99446)	5/19/2001 10:17:24 AM
From: arun gera	Read Replies (1) \| Respond to of 152472

>>Sounds like an investment into the companies making 802.11 must be a pretty good investment. After all, they will be shipping 200 chips for every single Chip qualcomm delivers in this configuration!!!>> That is why I own ARMHY. Any other companies that would benefit from this trend towards ubiquitous computing? Arun