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

To: hueyone who wrote (126140)	12/22/2002 6:00:46 PM
From: Jim Mullens	Read Replies (2) \| Respond to of 152472

Hi Huey- In the interest of your..” trying to get a better understanding of QCOM's future”, I’ll offer some of my thoughts. 1. First off, MSFT is, has been, and will continue to be for some time a very successful and dominate company and as such your comparison of Qualcomm to Microsoft is fair enough. 2. I’m not totally familiar with MSFT’s beginnings or all of its business dealings, but I believe they are very dissimilar to Qualcomm’s. It is my understanding that Qualcomm was fairly “late to the party” as concerns mobile wireless as the entrenched technology when Qualcomm entered the wireless market was GSM/TDMA. The incumbent carriers and their vendors at that time, for the most part, had a pretty good thing going and didn’t appreciate the fact that a disruptive technology such as CDMA could upset their applecart. Hence, those same folks made it pretty difficult for Qualcomm to enter “their game”. 3. For Qualcomm’s first 11 years of existence as a public company (up until 2000YE), it was an uphill battle to get CDMA accepted. Qualcomm almost single-handedly had to design, develop, manufacture, and market just about everything involved with mobile wireless CDMA (infrastructure, handsets, chipsets for both, software for both, etc, etc). CDMA was a new disruptive technology and the incumbent vendors lacked the engineering talent and know how that Qualcomm possessed, and didn’t for the most part want to upset the balance in their current GSM/TDMA businesses to undertake the more difficult and riskier CDMA venture. Additionally, I’m sure many of the entrenched GSM/CDMA carriers were putting lots of pressure on those same vendors to not pursue CDMA in any great effort. Qualcomm expended much effort ($) during its formative years in developing the CDMA market, operating the money losing infrastructure and handset divisions before selling them to ERICY and Keyocera (sp), and investing in numerous carriers to initiate CDMA markets. These were very expensive propositions but were extremely vital activities necessary to eventually gain a leading position in 2G mobile wireless and the dominate position in 3G mobile wireless. 4. Qualcomm’s efforts to date, and the enormous dollar expenditures to achieve such (with as you say, not much in retained earnings to show for those 11 years ), were IMO necessary and vital to lay the foundation for the future dominance of Qualcomm in 3G mobile wireless and no doubt many other richly rewarding business that aren’t even envisioned by most at this time. 5. So, Huey, not everything in life immediately goes to the bottom line and in a lot of cases patience is richly rewarded. Qualcomm has retained all of its highly talented engineering and professional staff through these troubled telecom times and has continued to push the state of the art in mobile wireless technology through its vast R&D expenditures. However, just because such effort and expenditures have not translated into retained earnings, I as a long term Qualcomm investor don’t feel it’s been a wasted effort. On the contrary, those expenditures were vital to assure the future dominance of Qualcomm. If the accounting profession would correctly count (IMO) patents as a asset just as it counts land, buildings, and tangible property, some of these expenditures would have been recognized and would now appear on the balance sheet and in increased Qualcomm book value. Hope this helps you “to get a better understanding of QCOM's future.” Jim