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

To: slacker711 who wrote (127096)	2/21/2003 9:43:24 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 152472

Hi Slacker: So....you are predicting handsets will cost less than $50 in six years. Sure. Some handsets will cost a gazillion bucks. Others will cost very little. Average is on the way down. It's Moore's law combined with the law of overcapacity-to-supply and ubiquitous demand. When you aspire to serve 100% of the planetary market, your product mix gets to includes all of the low-end models as well as the high end models. Qualcomm's 15% of the market is currently overweighted to top-end models because CDMA is a premium value proposition. At the moment. But when the Inevitable Domination of Technological Superiority occurs and CDMA is ubiquitously deployed this disappears. Somewhat by definition. I'd be willing to bet that the Market Revenue potential of the top 15% of the market is bigger than the Market Revenue potential of the bottom 40% of the market. If the 80/20 rule holds in Cellphone ASPs like it does elsewhere on the planet, then you might be safe betting that Qualcomm's revenue from 100% of the market would be twice that of the top 20% of the market. Let's triangulate in from this oversimplified perspective. If Qualcomm owns the top 15% of the market, then growing down the next 5% represents 33% growth. They'll be there next year. Unfortunately this puts them at 20% of the market. The next 80% of the market is worth the same as the top 20%, so revenue doubles from there. Pretend that happens instantaneously. We're at 2x1.3x$1.30 = $3.45 in revenue. Double the market you get $6.90 Now factor in any decrease in ASP between then and now and some reality factor for less than 100% market share 'cause even AMPS will still be around until after you die (actuarially speaking)... and you don't end up with as much business growth. Extrapolating a high-margin subset of the market down onto the whole market is unwise. As far as: So....you are predicting handsets will cost less than $50 in six years. I think that would be a pretty good deal for a combined cell-phone, MP3 player, 3 Megapixel digital camera, camcorder, GPS locator, high-speed modem and game player. I tell you what, bookmark this post. If I can't buy one of those for $50 somewhere during the next 6 years I'll have one [or its then technological equivalent] made specially for you and send it your way. Postage paid, to wherever you are on the planet. However, if I can, you send one to my son, wherever he is on the planet, postage paid. Deal? John