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

To: David E. Taylor who wrote (110501)	1/8/2002 6:12:21 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 152472

i guess they spend a lot on phones there! China's per capita GDP in 2000 was only $3600 (purchasing power parity). cia.gov avg of $181 per JPM equates to 5% of per capita GDP, just for the phone. high-end $360 phone is 10% of per capita GDP. i don't see how those prices can be sustainable beyond a narrow segment of the population, unless somebody farther down the supply chain is very generous. e.g., compare per capita GDP in the US ($36,200) with ASPs here. i guess that'd be like an ASP of $1800 in the US (might have been possible if G* had caught on). even in "rich" Shanghai, per capita GDP last year was a whopping $4500. english.peopledaily.com.cn

To: David E. Taylor who wrote (110501)	1/8/2002 6:18:33 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 152472

Ah ha. So we can quantify a few things. By 2005 "Optimistic": Let's use 5% of handset price = QCOM profit Let's use top end handset ASP = $300 Let's use 80 M handsets per year in China (ref. previous post, and then boosted 'cause I'm being optimistic) Let's use 50% penetration of CDMA, 50% GSM (I told you I was being optimistic) Let's use 750 M shares (<0% dilution) "Pessimistic" Let's use 2% of handset price = QCOM retained profit after any boondoggles Let's use bottom end handset ASP eroded by 10% p/a for 3 years = $120 Let's use 40 M handsets per year in China Let's use 30% penetration of CDMA, 70% GSM Let's use 5% share dilution = 870 M shares Optimistic:-- 5% * $300 * 60 M * 0.5 / 750 M = $0.60 EPS contribution Pessimistic:- 2% * $120 * 40 M * 0.3 / 870 M = $0.03 EPS contribution Or maybe folks want to plug in their own numbers. Sure, China's a large market. But even hundreds of millions multiplied by a few percent of a few hundred and then divided by hundreds of millions lies somewhere in the range of unity. John