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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (50939)	4/7/2002 12:44:28 AM
From: techreports	Read Replies (1) \| Respond to of 54805

Mike, thanks for the write-up. I'm worried about Qualcomm's customers. Since the correction, I feel it makes sense to focus on the customers of a company you may own stock in. If we focused on this, we would have been concerned that Nortel, Lucent, and others were generating huge amounts of revenue from the likes of 360Networks, XO Communications, ect.. Not only that, these companies selling the hardware in exchange for stock or later payments. All this is coming back to bite us in the ass. So how do Qualcomm's customers look? Sprint PCS has $313,000,000 in Cash And Cash Equivalents and $288 million in Long Term Investments. That's not a lot, considering their burn rate. Especially considering they pay $274 million per quarter in interest for their debt. That's 1.096 billion a year in interest on their debt..? They've got decent gross margins at 49.71% Last quarter, Sprint had a large non-recurring charge which hurt profitability. The three quarters before, Sprint produced operating income, which averaged at $329 million. Unfortunately, interest payments end up taking most of this away. Nextel has pretty amazing gross margins. 63.59% for the last quarter and 62.68% for the year. Nextel focuses primarily on the business users. Apparently, their direct-connect feature is very popular and they also signed an exclusive agreement with Qualcomm to use Qchat. Qchat basically allows a CDMA carrier to offer direct-connect. They gave Qualcomm 100 million for the right. Qchat only works with BREW enabled CDMA handsets. So that would indicate that Nextel plans to move to CDMA. They just don't have the balance sheet to do this, I guess. Nextel would be a nice win for Qualcomm. The second biggest news in the last year is that Qualcomm also announced a technology allowing a CDMA user in China to push a button and instantly talk to a U. S. user. This is a technology that has been highly successful for Nextel in the U. S. market. I have no idea how important that concept will be in a world market and I haven't been able to come by an informed opinion about Qualcomm's decision to license it exclusively, but it was a surprise to me that seems to provide more opportunities for Qualcomm. do you happen to have the link for direct-connect deal with china? Will this mean China Unicome will offer direct-connect features like Nextel to the Chinese market (hopefully business market)? If so, that could be a very interesting, considering how popular direct-connect is in America. I remember the deal was announced, although it wasn't what I thought.