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

To: engineer who wrote (32455)	2/16/2003 2:26:12 AM
From: q1000	Read Replies (4) \| Respond to of 197337

Shareholders Meeting – Summary and Commentary For the benefit of those who do not want to read my lengthy notes on the shareholders meeting (27 pages in Word format), I have picked out a few quotes from my notes which are fairly good statements of what was said by the Qualcomm executives My general nature is to be highly analytical. However, once I become convinced of something, I can revert to my former cheerleader days. My overall impression of the principal speakers at the meeting – Dr. Jacobs, Tony Thornley and Bill Keitel – was that they have carefully analyzed all of the data and Qualcomm’s position and are superbly confident that Qualcomm is on a path to conquer the world of wireless, i.e. why the best is yet to come. Unlike my nature and despite some very positive statements, all three of them were reserved in their manner of expressing their confidence. The way Mr. Market punished Qualcomm last week on the Intel announcement convinces me once again that, as Jim Mullens said at the meeting, the analysts and financial press do not understand Qualcomm. I am an Intel shareholder too – indeed my position is much older and much larger than my Qualcomm position – but I do not believe Intel can touch Qualcomm on wireless chipset integration. What Qualcomm has done with ZIF on the new chipsets is astounding but Mr. Market will not believe it until he can play with a small high-end 6300 phones while roaming the world. I personally regret that Intel seems to have given up on CDMA and has chosen instead to address a 2G market which will begin declining and may be gone in a decade or so. But Intel’s pass on CDMA is Qualcomm’s gain. I am reminded of the summer of 1998 when Qualcomm had won the 3G battle but the stock languished until the hard evidence of the Ericsson cave-in was thrown in Mr. Market’s face. ------------- Dr. J on Digital Media: I am sure in a few years just about all the movies you’ll see in major theaters – probably around the world – will be distributed, projected digitally and probably also be taken digitally – so a very interesting area although certainly not of the size of our CDMA technology. Tony Thornley on Qualcomm’s Mission: As of now, we are at approximately 13% of worldwide wireless subscribers on CDMA. And therein lies the fundamental point about the trip just beginning. Certainly we are on a path to have all of the 1.1 billion wireless subscribers use CDMA. Of course, that number of 1.1 billion will grow. Bill Keitel said it more dramatically: 13% share today of wireless subscribers – we want to grow that to 100%. TT: We are looking at a small base station for EV-DO to deliver high data rate capability to enterprises. I wish I had heard this clearly at the meeting and asked a question. Qualcomm seems to be coming up with a more secure alternative to 802.11/WiFi. A corporation could set up a EV-DO base station in its building or campus – presumably using the public frequencies – and then its employees could have fast wireless data access. TT on the impact of cutting edge phones in Japan: Black and white phones are almost in museums in Japan. In response to Jim Mullens question, Dr. J noted the opportunities for the MSM6300 based phone with Vodafone and Unicom: You mentioned Vodafone, a GSM major operator worldwide but also owns a share of Verizon. This allows them the opportunity to have a phone where they can have the GSM service in Europe and then people that roam in the U.S. can roam on the Verizon network, rather than on another GSM network here. By the way I think that will improve people’s – in Europe – opinions of U.S. cellular service – they’ll be seeing an outstanding service. That I think is indeed going to make a difference. You mentioned also the situation with China Unicom who currently operates a large GSM network and is now very rapidly expanding a CDMA network. Some of their focus is indeed on this type of phone is to offer their GSM users – they have a large number – they don’t want to pull them off – a potential data service on CDMA. And so it does open up lots of opportunities. As we continue to provide multi-mode phones – ones that operate with the different technologies – ... all that does open up. I think that those phones will become a significant parts of our business. The pricing – clearly if you have a GSM-only phone, that will still be a less expensive phone. I think many of the high end phones and the phones where you want to take advantage of a significant data service will indeed benefit from the introduction of these chip and our sense is to price them in a very competitive fashion. Don Schrock weighed in on the same point with an even more upbeat tone: Vodafone and Unicom are extremely excited about these chipsets. It can appeal to some high-end consumer that will roam from country to country. In addition, the RF chips that go in it will dramatically lower costs of GSM and CDMA in one phone – that’s one of the real strengths of the complete chipset. Then, as this takes off, what we are looking at for future generations is to segment that GSM/CDMA marketplace – not only the high end but, as you’re pointing out, come down to lower end chips also to address the markets throughout the world. I note that the Unicom group had 61 million GSM users at the end of 2002. We have previously seen, as noted in Don Mosher’s recent post, Message 18563925 Unicom is said to have capacity problems with GSM. It can hold only 80 million users in its 80 MHz. If this is true and it only has 19 million to go, I would anticipate that Unicom will make a major effort to push GSM users to 1x in as many practical ways as possible. GSM1x and the MSM6300 both could play major roles in solving this spectrum problem for Unicom. After the meeting I was told that Unicom would like to use this 6300 chip for data rather than offer GPRS to its GSM customers. Let’s hope Qualcomm can price the 6300 chips in a competitive fashion. A couple of years ago Dr. J spelled out in blunt detail the problems with WCDMA and the reason for his then pessimistic forecast of commercial deployments. Qualcomm must be ironing out most of the problems because Dr. J’s tone is much more upbeat about WCDMA and in the Q&A he declined the opportunity to make negative statements about WCDMA. After responding to one question about adding synchronization to WCDMA, Dr. J said: I will say that WCDMA will be a significant improvement over GSM/GPRS. So just going to that will be a significant improvement and then there are some other things that can be further improved, as there are with any technology. Dr. J declined to make a Ben Garrett-type statement about WCDMA’s need for a lot of cell sites but his statement seems to support in general Ben’s comments. He spoke first of the fact that WCDMA would need for cell sites because it is in higher frequency – 2.1 GHz. Second, he said that more cell sites are needed if you want higher data speeds, such as 160 kbps or higher. But then expanded on his important Slide 28 which shows a country with WCDMA deployments in a few cities, GSM1x in other cities and GSM only in more remote areas: I believe that what will happen is that there will be some fairly dense provisioning of cell sites in urban areas – a limited number of urban areas – to support higher data rates and then outside the question is what do you do. Well here you have the opportunity, again as one of the slides showed, of going to a 1xEV-DO type capability. Until operators begin to get experience with WCDMA – look at the experience with 1x and 1xEV-DO – they’re still not quite sure about how best to proceed ahead. I think looking ahead we have a very good opportunity. First of all, the sooner WCDMA gets out there.., we’re very pleased about that. But I suspect there has to be supplementing it – using lower frequency to get broader coverage – to make sure that these advantages are countrywide, rather just city wide. Don Schrock was extraordinarily upbeat about the Qualcomm booth at Cannes next week: We have Samsung and LG and Sanyo who will be at our booth and have some very spectacular UMTS/WCDMA terminals, including GSM as well. So we think it’s going to be quite exciting for the Europeans to see the Qualcomm chipsets in these phones that are being brought to the market during the latter half of 2003. On the competitiveness of 1x and 1xEV-DO, Dr. J’s answer to a question was a bit vague in specifics (and hard for me to hear at times) but he seemed to be saying that the advantage of 1x and 1xEV-DO over GPRS was greater than they used to show in the slides where GPRS was 42 cents a MB, 1x was 6 cents and 1xEV-DO was 2.3 cents. His answer seemed to say that the 1x technologies were now cheaper since infrastructure costs have declined. He said that the 42 cent figure was based on GPRS estimates that were practical (throwing out the crazy ones) but optimistic. If I heard him right (and the webcast is faint at this point so I hope someone without my hearing impairment will double-check me), the GPRS numbers are not being me. The gap seems to be widening.