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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Michael Allard who wrote (23103)	5/28/2002 4:44:10 PM
From: David E. Taylor	Read Replies (1) \| Respond to of 196782

Michael: Sorry, not a very clear post on my part - I was thinking back to an exchange Eric L. and I had on the other thread: Message 17507765 I agree that there isn't a 1:1 relationship between handset sales and subs, that was in fact buried in my point. Handset sales are a combination of existing subs upgrading service/handsets with the same carrier, subs moving from one carrier to another and buying new handsets, and new sub additions. If you look at the numbers in my previous post (referenced above), and you accept the 170 million CDMA subs by year end, the pre-existing sub base of 112 million (12/31/01), and just the historical 50-55% "replacement rate" on those pre-existing subs (i.e. no additional "pent up demand"), you wind up with 2002 handset sales of 114-120 million - way above the 80-85 million QCOM is (conservatively IMO) targeting. OTOH, if you accept the 80-85 million handset sales figure, and use the same 50-55% replacement rate on 112 million, you wind up with at most 29 million sub additions - below the rate of sub additions in 2000 and 2001, which were 30.3 and 31.0 million respectively. As I said in the previous post on this, the 170 million sub number by year end requires a quarterly increase of 16.6 million for Q2-Q4, almost double the Q1 rate of 8.8767 million. But even maintaining the 31 million sub adds of last year, plus a "high end" 55% replacement rate on 112 million pre-existing subs, would get us to 92-93 million handset sales for the year. I think QCOM is lowering the handset expectations with their 80-85 million target, to which IMO there is probably room for upside surprise as the year wears on - a lot depends on the Verizon and Sprint roll outs here. OTOH, I think the 170 million year end sub figure - apparently an analyst company "consensus" or "average" based on the slide from the 5/22 analyst meeting - is way optimistic. David T.