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To: Caxton Rhodes who wrote (13829)	7/16/2001 12:00:57 PM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 34857

“Me thinks they do protesteth too much.” We have noticed a decided heating up of the rhetoric from promoters of the W-CDMA 3G standard. It seems that the number of times that the mantra is heard that “W-CDMA is the overwhelming choice of carriers for next generation wireless services” is nearly becoming a background drone. It occurs to us that we should ask why is there a heating up of the rhetoric if the statement is in fact true? If the statement is true, the rhetoric should decline. It is our belief that in fact CDMA2000 is picking up momentum. ooh I like to repeat my favorite part! Caxton

To: Caxton Rhodes who wrote (13829)	7/16/2001 1:07:30 PM
From: ronho	Respond to of 34857

Beginning of the end for W-CDMA in Asia is this is true, First Union Securities Covers QCOM 07/16/01 06:29 AM Source: First Union Securities Company Notes: Visit the CNET Brokerage Center for daily reports from the top Wall Street analysts. QUALCOMM Incorporated (QCOM-NASDAQ) Company Note SK Telecom May Drop Plans For W-CDMA--CDMA2000 Positives Strong Buy Rating: 1 Price: $65.58 52-Wk. Rng.: $108-43 Shares Out.: (MM) 806.8 Market Cap.: (MM) 52,909.9 Key Points We believe that South Korea's SK Telecom is considering abandoning plans to deploy W-CDMA on its new 3G frequencies and is considering expanding its CDMA2000 network instead. Contacts at SK Telecom have told us the carrier may petition the Korean Ministry of Communications for permission to install a CDMA2000 3G network on its new 3G frequency licenses. Several news sources in Korea and newsletters are reporting that the NTT DoCoMo strategic investment in SK Telecom has been put on hold until at least the end of July because of SK's re-evaluation of W-CDMA. Separately, we believe that Motorola (MOT, $17.59, Market Perform) is currently running demos of CDMA2000 1X overlays with several Latin American TDMA carriers. We reiterate our Strong Buy (1) rating on the shares. We continue to believe the stock should be a core holding for investors in the wireless equipment sector. Our $66 target price is based on our long-term CAPM and is probably overly conservative (see attached model). Company Description Qualcomm Inc. designs, develops, manufactures, markets, licenses, and operates digital wireless communications, infrastructure, and subscriber products, designs, and services. Discussion On June 6, 2001, we published a QCOM note stating that the China Unicom-KDDI IS-95 and CDMA2000 roaming agreement could cause Asian carriers to reevaluate decisions to build W-CDMA 3G networks. We also reported that we believed Nokia (NOK, $18.30, Buy) may be worried that TDMA carriers are considering a CDMA2000 1x migration path and that QCOM management had invested time promoting CDMA2000 1x to TDMA carriers in Latin America. Over the weekend, we received multiple confirmations that has lead us to believe that South Korea’s SK Telecom is contemplating abandoning plans to develop a W-CDMA 3G network on the new 3G licenses recently awarded by the Korean government. We believe that SK Telecom is contemplating petitioning the Korean Ministry of Communications for permission to develop a CDMA2000 3G network instead. Major Korean equipment manufacturers are supporting SK’s re-evaluation. SK Telecom’s basis for previously choosing W-CDMA in new spectrum was pan-Asian roaming, particularly with NTT DoCoMo. We believe the KDDI-China Unicom CDMA roaming agreement combined with reports of difficulties and postponements by NTT DoCoMo and BT Manx in bringing W-CDMA networks operational has caused SK management to reconsider the decision. It is our understanding that the SK Telecom – NTT DoCoMo strategic investment has been put on hold at least until the end of July pursuant to this technology re-evaluation. Separately our belief that some TDMA Latin American carriers are considering CDMA2000 was confirmed based on conversations over the weekend with contacts in Latin America. We are being told that Motorola is the vendor running at least one and possibly several of the working trials with Latin American TDMA carriers in testing an overlay of CDMA2000 1X. “Me thinks they do protesteth too much.” We have noticed a decided heating up of the rhetoric from promoters of the W-CDMA 3G standard. It seems that the number of times that the mantra is heard that “W-CDMA is the overwhelming choice of carriers for next generation wireless services” is nearly becoming a background drone. It occurs to us that we should ask why is there a heating up of the rhetoric if the statement is in fact true? If the statement is true, the rhetoric should decline. It is our belief that in fact CDMA2000 is picking up momentum. We reiterate our Strong Buy (1) rating on the shares. We suspect that QUALCOMM shares are mispriced due to misinformation and mis-perception by many investors. We believe that many investors believe that CDMA2000 will never have more than 10-15% of the global 3G market. We suspect that the percentage could be much higher. If carriers start to abandon W-CDMA in favor of CDMA2000 it could add at least 4-5 points to our long-term earnings growth rate for QUALCOMM and would make our near-term target price too low. Many investors believe that problems with W-CDMA and carrier postponement of 3G deployments are negative for QUALCOMM. The thesis being that it slows QUALCOMM’s future growth. Not so. We believe that every announcement of a W-CDMA deployment delay or postponement is positive for QUALCOMM because it increases the contrast between CDMA2000 (which is on-time and working as advertised) and W-CDMA (which clearly is running late and is not working as advertised yet). There are no instances of IS-95 CDMA carriers around the world announcing that they will deploy W-CDMA instead of CDMA2000. Some, like SK in Korea have said they will do both – but the only networks they are spending any money on are CDMA2000. Engineers within Verizon have told us that Verizon will likely never deploy W-CDMA because of the difficulty to deploy technically and uneconomic relative to CDMA2000. They went further and said that without new 3G spectrum it is a “non-starter.” This is not what has been portrayed by some industry watchers and the trade press. We see a regional battle shaping up. European manufacturers and carriers are committed to W-CDMA because of the perception we believe that it will disproportionately benefit European manufacturers. We are seeing growing momentum in Asia for CDMA2000, we believe because Asian policymakers and companies believe that Asian manufacturers have more expertise in CDMA2000. Investors should watch for one or more Asian GSM carriers opt for CDMA2000 for 3G instead of W-CDMA. Additional information available upon request. First Union Securities, Inc. maintains a market in the common stock of QCOM. The (an) author(s) of this note/report has(have) a long position in the securities of QCOM. 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. First Union Securities, Inc., may from time to time perform advisory or other investment banking services, or solicit investment banking or other business from issuers mentioned in this report. FUSI is a subsidiary of First Union Corporation and is a member of the NYSE, NASD and SIPC. Copyright © 2001 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 cnet.com. laodeng