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

To: Maurice Winn who wrote (112902)	2/10/2002 5:23:59 AM
From: Moominoid	Respond to of 152472

David, true, but the discounted free cash flow is a function of R&D achievements. Absolutely - I was agreeing with you that R&D is the same as investment from an economic point of view but not from a taxation point of view. So when investors focus just on earnings they get confused about the true picture. But OTOH, I remember when I held AAPL I was worried that they slashed the R&D budget in half. But they still seem to have come up with plenty of good new products since then. If they had developed something more revolutionary I'm not sure it would have given them greater sales. I decided to buy puts on gold stocks in the meantime together with being long QCOM. Our fellow BBRers will be disappointed that they haven't quite got another convert yet :) David

To: Maurice Winn who wrote (112902)	2/10/2002 2:21:53 PM
From: pcstel	Respond to of 152472

Maurice: When they understand ZIF and RadioOne and the effect on BOM costs and RadioOne device size, efficiency and subscriber demand, then they'll have an inkling of what R&D can achieve for sales and the bottom line. I agree with you on this aspect. However, lower BOM costs result in lower royalties! However, there a couple of clear advantages that ZIF will provide! And that is huge economics of scale for the handset manufactures. I still can't understand why Qualcomm has not announced a competitive GSM/GPRS only ASIC product. By providing a pin-compatible GSM/GPRS product to their ZIF CDMA 2000/1X RadioOne products. Qualcomm should be able to capture a large percentage of the Korean/Japanese GSM/GPRS handset market. One design and circuit board! Plug in the corresponding pin-compatible ASIC. And your done! WCDMA is still a dream in my book. One that may just turn into a nightmare of "no market anyway" Qualcomm should diversify itself to into a supplier of scale into the GSM market. (I realize there are no royality payment involved). But such a device would at least get growth moving in the ASIC division, and reduce Qualcomm's valuation volatility based on the success of WCDMA! By providing a ASIC based solution that is pin-compatible between 1X/1XEV/GSM\GPRS/ and WCDMA Qualcomm could provide a valuable economics of scale to the production side that would provide better margins to those manufactures which employed the pin-compatible Qualcomm ASIC's. vs those manufactures that do not employ Qualcomm Chips. Second, There is a clear advantage for those service operators that understand the technology, and it's economic's of scale to the UT manufactures. For example. PCS spectrum has been very valuable for a couple of reasons. First, there was only a definitive amount of spectrum available in the frequencies that allowed the use of "Off the Shelf" User Terminals and Infrastructure. So we had CDMA on 800 Mhz/1900Mhz, and GSM on 900Mhz, 1800 Mhz, and 1900Mhz. So manufactures could subsidize the cost of development of a given UT on a certain frequency over a large customer base. So there were tens of millions of potential users in the US 1900 Mhz PCS spectrum. Building phones required specialized RF components (SAWS, etc) for those frequency bands. With RadioOne, the UT's become "frequency agile" more or less. So the cost of building User Terminals and Infrastructure for non-standard frequency allotments becomes much, much more cost effective. So in the Case of Nextel where building and designing custom UT's and Infrastructure to use non-standard Cellular/PCS frequencies was oppressively expensive. This development cost was offset by the lower cost of spectrum acquisition. With RadioOne. The development costs of 'non-standard' UT and Infrastructure development will be marginalized due to the fact that these specialized-frequency-use UT's can still enjoy the cost advantages of the "economics of scale" of a given UT design across a much broader range of frequencies.. Because development costs can be subsidized across the entire production run of the given UT. RadioOne makes UT's more frequency agile. Which means the monolith's like Verizon, Sprint, ATT, Cingular which have attempted to maintain market dominance via control of the supply-side of the available spectrum. With RadioOne, that system of control will no longer work. Because there will be some small company that will pick up 5 or 10 Mhz of Nationwide spectrum in some "out of Cellular/PCS band" and start building a Nationwide Wireless Communications company. PCSTEL