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

To: q1000 who wrote (25033)	7/28/2002 5:00:51 PM
From: q1000	Read Replies (2) \| Respond to of 196450

Qualcomm Conference Call Notes, Part III - Dr. Jeff Jacobs Paul Jacobs re Wireless Internet Group Commoditization of voice Voice is still the killer application in wireless. Even the most aggressive 3G operator, KT Freetel, is predicting that 25% of their revenue will come from data in 2005, which means that voice will continue to generate 75% of their revenue. This does NOT mean that data is less important. In fact, what we see is that data applications today are driving consumer choices – market share and economics. This is because, when a consumer buys a phone, they expect it to provide voice, a service which is increasing seen as a commodity. This commoditization has led to concerns about business model of the wireless industry. Because the financial markets believe that wireless operators are stuck in a utility-like commodity market, with high levels of debt in some cases, they are restricting access to capital. Therefore, the liquidity of carriers is at issue. Commoditization of voice affects all of the key carrier metrics. Since the commodity is sold on price, voice ARPU is under pressure and cost per gross add or CPGA is increasing due to the heavy marketing of commodity service and the need to sell undifferentiated devices. Given that consumers perceive little difference between voice providers, they are more willing to churn between providers. Data provides differentiation Fortunately, we have real examples of how applications and services are driving consumer behavior that is based upon differentiation and not commoditization. And this is already having an impact on those carrier metrics. • KTF has reported a 6-fold increase in data ARPU for its 1x and BREW subscribers. • Verizon’s upcoming lineup of color screen phones illustrates their view that handset subsidies and CPGA can be reduced because high-end phones need lower subsidies because the consumer is willing to pay for additional value. • In Japan, KDDI has built market share and reduced churn 20% through its camera phones and gpsOne applications, both of which depend on data services, not voice. Technology Licensing Technology licensing business revenues grew revenues over the year-ago period and the March quarter, a 10% and 3% increase respectively. Higher volume shipments of phones and positive trends in average selling prices contributed to the June quarter results. Those trends are expected to continue in the September quarter. And shortly after the end of the quarter, we signed royalty-bearing agreements with Alcatel and NEC for WCDMA and TDCDMA. Digital media We continued to work on obtaining industry acceptance for our digital cinema core technology, working in conjunction with the industry consortium and an industry standards body. 8 movies have been released in our format so far, with others on the way. Wireless Business Solutions We shipped approximately 12,000 OmniTracs in the quarter, up from 11,000 in the year-ago period and 9,500 in the last quarter. This brings the cumulative total of OmniTracs and related units shipped to more than 435,000 worldwide. We acquired the equity interest of CNR, the exclusive distributor of OmniTracs in Mexico for $24 million during the June quarter. This acquisition increased our equity ownership in CNR to approximately 97% and has served the strategic priority of expanding our QWBS business in the NAFA-wide market. We also announced that Safeway stores in the United Kingdom would deploy UgoTracs throughout its entire fleet. In addition, we incorporated new security enhancements for the OmniTracs system, including driver identification, tamper detection and wireless panic button features. We demonstrated these security features on Capital Hill last month in an effort to show Congressional leaders and the Department of Transportation that proven technologies like OmniTracs can be utilized in the transportation and tracking of hazardous materials. Internet Services Division - BREW Our Internet Services Division is one and a half years old and many important milestones have already been achieved. As Irwin said, we reached roughly 1.3 million BREW users worldwide but here are some additional data points: • BREW users have downloaded over 8 million BREW applications over the air. • Roughly 300 BREW applications are on sale to consumers today. • We have issued digital signatures for over 2,000 applications under development, in trial or currently on sale. • These applications are running on 19 commercial BREW handsets from 7 manufacturers. • In addition, over 50 BREW-enabled handsets are currently in development from various manufacturers. • We have signed definitive agreements with 4 operators and launched 3 commercial BREW networks in 3 different countries and we expect to conclude additional definitive agreements as a result of trials we are currently conducting or planning to conduct in the next quarter. • We have hosted several BREW developers conferences around the world. The fact that the BREW solution has been so readily accepted emphasizes the need for an end-to-end data platform. During the June quarter, there were several BREW carrier developments: • Verizon, the largest wireless carrier in the United States, launched nationwide in June. By year-end, Verizon intends to offer 7 different BREW handsets. • We signed an agreement with Alltel to provide the BREW platform for select markets by the end of 2002. • Of the over 300 applications that KT Freetel is offering, over half are network applications. This is significant because KTF realized early on that driving the ratio of network applications would help them more fully utilize their network and drive ARPU. KTF is selling 16 different BREW-enabled handsets. • We signed an agreement with Telesp Cellular in Brazil to conduct a BREW user trial of downloadable applications on its 1x network. Release 2.0 has increased security for m-commerce applications, a better browser component, and richer multi-media and graphics. We have also been active with CDMA carriers in their enterprise efforts. We think this is a great opportunity for these operators to leverage their 1x networks with BREW capability over their competitors.