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To: Venkie who wrote (4470)	11/2/2001 11:23:51 AM
From: im a survivor	Respond to of 13815

ssb says things look good for qcom : Yesterday we held a meeting with management from China Unicom. In the meeting Unicom outlined its plans for the launch of Phase I of its CDMA network (service by January 2002), its Phase II expansion, its subscriber forecast for 1H02 as well as provided us with some insights on its handset agreements with its distributors. Unicom believes Phase I of its CDMA network deployment will be completed by the end of 2001 and will have coverage in 300 cities with the capacity for 15 million subscribers. Unicom expects service to be launched by January 2002 and is forecasting to add 2 million CDMA subs in 1Q02 and an additional 3 million subs in 2Q02. Unicom also indicated it is planning to launch 1XRTT trials in 10 cities in 1H02. Unicom's Phase II expansion will be a contract to provide additional capacity for roughly 20 million subscribers. Unicom confirmed our comments Wednesday (please see our October 31 industry note) that it would not make a vendor decision on this contract until mid 2002. According to Unicom it is currently using 10 vendors for its Phase I contract, with Motorola (MOT, 2M, $16.37) and Lucent (LU, 2H, $6.70) being the largest suppliers. We would expect the same 10 vendors to be on the short list for Unicom's Phase II contract, although Unicom stated the breakdown in Phase I is not guaranteed to remain. For handset sales Unicom is using 10 nationwide distributors, where each has committed to Unicom to sign up 1 million subscribers in 2002. If they do not achieve these goals there are "stiff" penalties (Unicom did not discuss any specifics of the penalties). We believe this provides additional comfort with respect to the take-up of CDMA services in China as these distributors are financially bound to the success of the service. In our opinion this is another positive for QUALCOMM. Unicom will initially launch service with single mode CDMA handsets at its distributors. It is currently testing dual mode (GSM/CDMA) handsets that utilize 2 separate chipsets, however no details or guarantees were expressed about availability. Unicom also highlighted that QUALCOMM remains committed to a single multi-mode chip (GSM/CDMA) for deliveries in mid 2002, which would mean multimode handsets with a single chip could be available by the end of 2002. We believe a multimode handset that is affordable would be a major selling point for Unicom in attracting customers given the scale of the GSM networks in China, which would allow for better coverage through roaming. We believe this news from China Unicom is a positive for QUALCOMM as the main catalysts for the stock in the near-term are the take-up of 1XRTT and the launch of CDMA services in China. We feel Unicom's positive comments regarding its CDMA launch should help alleviate any fears/concerns about the timing and take-up of CDMA services in China. We do not view Unicom's decision to postpone awarding its Phase II expansion contract as a negative given (1) its initial network capacity is 15 million users, which is plenty for the first year of service; (2) Phase II expansion should be completed by the end of 2002 or early 2003; and (3) the real focus and opportunity for QUALCOMM is the take up of service by subscribers which translates into ASIC shipments and handset royalties. We reiterate our Buy (1H) rating and our 12 month price target of $70. Companies Mentioned: China Unicom (0762.HK covered by Rohit Sobti/3H) ssb, 11/1/01