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

To: qveauriche who wrote (103503)	8/31/2001 3:51:13 PM
From: kech	Read Replies (1) \| Respond to of 152472

If capital is scarce, and the cdma 95 to 1x upgrade is much less expensive than the gsm to w-cdma upgrade which would occur more rapidly? Alternatively, if capital is scarce, and you are an LA TDMA provider, the 1x upgrade is cheaper and less complex than the GSM/GPRS/W-CDMA upgrade. Again this would favor the 1x upgrade. I see your point that the rate of upgrades might slow down in general, and firms might try to keep the GSM/GPRS version longer rather than actually invest in the W-CDMA part because of capital shortage. But it won't slow down the CDMA to 1x upgrade (because of voice efficiency). It might slow down the TDMA to 1x upgrade but should slow down the TDMA to gsm/gprs even more. Becuase in the latter, there is capital cost with no immediate benefit.

To: qveauriche who wrote (103503)	8/31/2001 5:07:58 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 152472

It is not as simple as capital being cheaper or less expensive. There is also the other minor reality of existing debt loads and ability for the borrowers to service more debt. With reduced competition as a consequence of increasingly insolvent competitors, pressure to increase infrastructure build out in Telecom's is easing. Wireless is not immune. So while the supply of capital is not closed, the investment of capital in infrastructure is being reduced at a faster rate. Another thing to note in this word "reducing" is the benchmark "from where". Since 1996 we have seen three major infrastructure shocks which together have attracted unprecedented capital into the Telecom markets. Any one of them (Global Telecom Deregulation, Internet buildout, and Y2K) would have caused a significant up tick in capital consumption demand... the three essentially together created something enormous. Add to that several parallel and similarly noticeable but temporary macroeconomic factors (e.g. expatriation of Japanese savings and US baby boomers at peak surplus income phase)... The net effect was that the supply of capital rose just as fast, if not faster, than demand. Both were taken to bubble levels. Not surprising that every infrastructure provider saw hypergrowth in light of this demand. But it is entirely reasonable to expect that if either of infrastructure demand or capital supply returns towards more normal levels... well, capital investment will decline, and thus so will the revenues of the industry that services this capital expenditure. It is one thing to be earning revenue from cell phones when nobody has one and facing an infinite growth trajectory. It is another to be earning revenue when 50% of the profitably serviceable market holds one, and another when this saturation reaches 80%. And more so when, in parallel, the hurdle height of profitably serviceable is rising as a consequence of diminishing effective net margins. So to answer your query are the capital markets going to be closing? I suppose that when it comes to telecommunications companies, they might as well be. Because spending on telecommunications infrastructure is going down. To more normal levels. What this means for companies like Qualcomm is a retrenchment of activities to the frenetic to and fro of a healthy and vital business. What this means for stocks such as QCOM (priced for continued hyper-growth as opposed to reasonable excellent growth) is a corrective phase as economic value catches up with the stock price. One can hope that the corrective phase is nonviolent. But that depends on the patience of investors. Which is being stretched. So far, one sees that the patience of investors in equities like NT and ERICY and JDSU and LU and SEBL and SUNW is easily broken. That of investors in CSCO and QCOM less so. But it seems to me that the end result of all will be towards a similar place. In the end, I don't suppose the velocity will matter that much. John.

To: qveauriche who wrote (103503)	8/31/2001 5:26:43 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 152472

>>With 7 rate cuts, surely credit will be looser in the coming quarters.<< qveauriche--The problem doesn't have to do with interest rates or available credit but with total debt held by these companies (the service providers and most of the equipment companies, except for QUALCOMM). They've got so much debt that they can't afford to invest, no matter how cheap interest rates are. This is why I believe the service providers will do everything possible to convince consumers that the existing services are good enough--no need for anything but the most basic data access, no need for high speed, etc. Take a look at all the advertising these companies are doing. It's all oriented towards voice, with just a few crumbs thrown out for those who want to get stock prices or send short messages. It's a strategy guaranteed to make existing, inferior systems look okay to consumers, many of whom don't know the difference. Art