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To: Jacob Snyder who wrote (50084)	1/25/2002 6:27:43 PM
From: Mike Buckley	Respond to of 54805

Jacob, Thanks for that write-up. I haven't read the press release or listened to the conference call. Based on your post, I agree with everything you mention, though I'd like to clarify two points. The first is that I'm not as upset about QSI aka The Black Hole as you and most people seem to be. My take is that the company has made a lot of decisions to foster growth of CDMA. Some of them have worked out really well and some haven't. In this relatively early stage of the development of the market for CDMA, I think it's reasonable to assume that the QSI-funded investments will be a greater drag on earnings and cash flow than years from now when the market has evolved to a later period in product adoption. My second point is with regard to your final paragraph. I think your expectations for wireless in the near term were probably greater than mine. When I look at the various players in Qualcomm's value chain, I believe a realistic assessment causes us to be cautiously optimistic at the very most about the near term. Thanks again for a nice post. --Mike Buckley

To: Jacob Snyder who wrote (50084)	1/25/2002 9:09:40 PM
From: slacker711	Respond to of 54805

If 1X chips have higher ASPs, but they expect ASPs for phones to decline (by 0-10% in 2002), then they are expecting to get a higher % of each $ spent on phones. I don't understand why they should expect this. I don't see evidence that their bargaining position has improved, relative to others in the supply chain. A couple of thoughts... The one area of guidance where Qualcomm has almost always been conservative has been ASP decline. In the past they have called for ASP declines on the order of 20% YoY. These have never really materialized. qualcomm.com In fact, this is the first time I can ever remember Qualcomm talking about flat ASP's YoY. I actually think that this will be conservative for the US, Japan and Korea....but the wildcards will be China and India. Thus far the Chinese ASP's look relatively high but I dont know how this will trend over time. I can absolutely guarantee that India is going to demand handsets with lower ASP's. So....basically, I think that the markets where the 1x is actually utilized we will see higher ASP's. Also...Qualcomm is in a pretty good position to grab more and more of that ASP. The new chipsets (which are aimed at regrabbing the low-end of the market from Nokia) are going to incorporate ZIF architecture. This new architecture is going to dramatically reduce the number of components that are needed for the handset (none of these other components are supplied by Qualcomm). Also....even low-end handsets in many parts of the world are going to have GPS and BREW in them. Both of these functions are going to increase the software content that Qualcomm has in the handset. Like Intel and Microsoft, they are going to start eating parts of their value chain. 1. QCOM has a bad habit of big losses from Strategic Initiatives. No argument...and I dont think that these investments are stopping anytime soon. This quarter most of the FCF will be sucked up by the Reliance investment, and there is still a possability of an investment in a Taiwanese carrier. I simply hope that this round of CDMA investments duplicates LWIN's success and not GSTRF's failure. One other development... I think that 9 months ago a conservative outlook for Qualcomm would have had them with 0% of the W-CDMA chipset market (many analysts used this for their model). Qualcomm has really progressed on this front over the last couple of quarters. They announced that a couple of customers will be using the MSM5200 (which was supposed to be a test chip) in commercial handsets. My guess is that we can expect to see these by the end of the third quarter. I think a new conservative model for Q's W-CDMA chipset marketshare would be in the 15% range. This has a pretty big effect on future earnings considering the magnitude of the expected W-CDMA market. No idea what an optimistic estimate of Q's chipset marketshare should be....I'm hoping Schrock (?) is right when he said "all of it" <g>. Slacker