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

To: Cooters who wrote (41100)	6/12/2004 7:33:12 PM
From: Jim Mullens	Read Replies (1) \| Respond to of 196446

Cooters Re: Bear Stearns /TMNG Wireless Broadband (WBB) report- Thanks for the interesting report (linked from Flarion). As you said there was quite a lot of interesting info, but this is my take from a Qualcomm investor's perspective. Sometimes one can garner more from what is known and not said, rather than what is actually said. That may be the case in the BS (Bear Stearns) report. It is stated that TMNG co-authored the rather lengthy (75 pages) report and from the length and alluded expertise of TMNG (leading provider of consulting services to the global communications industry with more than 400 consultants worldwide) one would expect a more thorough discussion of the prominent WBB enabling technology today. Surprisingly, very little was mentioned of CDMA2000 EV-DO /DV in respect to what is commercially deployed today and its future upgrades. Exhibit 1 provides a comparison of the respective speeds of the various wireless standards under discussion- (my add- 3GCDMA 2000 EV-DO is proven and may be higher than shown, the others are theoretical ) WIFI 802.11....11-54 Mbps 3G....................300 – 500 kpps - 802.16..............15- 70 Mbps- 802.20..............1.5Mbps- l Exhibit 37 lists Flarion’s speed at various pricing tiers Lite.................750kps dn/ 200 up 150mb/mo @ $35/mo Standard........750 dn/ 200 up unlimited @ $50 Deluxe............1.0Mbps dn / 200 up unlimited $65 Platimum.........1.5 dn/ 375 up unlimited $75/mo Again, Flarion’s solution is unproven in a full commercial deployment. It is questionable as to why EV-DO Rev A and EV-DV comparisons were not provided as much detail has been published by Qualcomm and others and is readily available to any one of us and therefore certainly BS’s and TMNG’s “analysts” / consultants. One of Dr. IMJ’s charts at their recent Spring Meeting for the investment “analysts” provided a direct comparison to OFDMA, stating “OFDMA data rates similar to 1xEV-DO Rev A”, and provided the following data- .................................UP.............Down..............Uplink Avg Throughput 1xEV-DO Rel 0........153 kbps ....2.4Mbps..........300 kbps (dual receive RX) 1xEV-DO Rev A.......1.8Mbps......3.1Mbps..........600 kbps (dual receive Rx) 1xEV-DO Rev A........1.8..............3.1...................900kbps (Quad Receive Rx) The report contained the following comments re: Flarion- 1. With standardization so uncertain, our focus in the current discussion will be on the proprietary technologies, most notably Flarion’s FLASH OFDM. 2. Given that Nextel has now moved to a commercial trial, it seems clear that the technical trial was successful. 3. From recent management meetings, we believe Nextel is very excited about Flarion. Nextel views the Flarion technology as more flexible and superior to CDMA EVDO at present, offering cost advantages and a two-year lead time on some metrics. 4. For purposes of this report, we still consider Flarion to be a portable-only technology, since the only device is a laptop and no truly mobile applications are available. However, we expect Flarion to make the jump from portable to mobile. 5. We believe that Nextel could rapidly commission Flarion-only or iDen/Flarion dual mode handset devices and develop services to make a truly mobile service. 6. For data, the company believes that Flarion is significantly better than the current version of CDMA EVDO, although EVDO Rev-A will tighten the gap in the 2005-06 time frame. 7. Overall, Nextel management seemed pretty down on CDMA due to the speed and cost differences, and expects Flarion to cost only one-third as much as CDMA on a per-bit basis. 8. Our analysis starts from Flarion’s own capital expenditure estimates of $5- $10 per pop for a typical overlay build. This is the range of costs required for a mobile operator to upgrade to FLASH-OFDM, assuming an existing 2G or 2.5G network. We believe Nextel would be at the upper end of this range as it needs a “forklift” upgrade to introduce Flarion rather than just a new channel card in existing base stations. In summary IMO the BS/ TMNG study appears to favor Flarion, while disfavoring the alternatives (WiMax 802.16 and Mobile-Fi 802.20) and basically ignoring EV-DO Rev A / EV-DV. A. The report appears to “assume” that the Flarion/ Nextel trial was successful technology wise since it has move to a commercial trial. B. The report states “. Nextel views the Flarion technology as more flexible and superior to CDMA EVDO at present, offering cost advantages and a two-year lead time on some metrics”. Interesting, as Qualcomm has stated their belief the EV-DO Rev A could be commercially deployed by the end of 2005. One must seriously question whether Flarion’s mobile solution will be fully tested with operational handsets within that timeframe, and at what comparable cost considering the limited scale of such. C. The report states “ Overall, Nextel management seemed pretty down on CDMA due to the speed and cost differences, and expects Flarion to cost only one-third as much as CDMA on a per-bit basis.” It appears that BS./ TMNG is again taking Flarion’s / Nextel’s word on the cost of data without providing and detailed study to document such. Qualcomm has a white paper detailing the economics of wireless data for 1xEV at $0.022 per Mbyte and further shows that a carrier charging $40/month for 268Mbytes can achieve a 45% EBIT margin. D. The report states “. Our analysis starts from Flarion’s own capital expenditure estimates of $5- $10 per pop for a typical overlay build” Again, it appears that BS/ TMNG is again not using any independent analysis to confirm Flarion’s estimates and does not provide any comparative detail as to what the costs would be to overlay and CDMA2000 system on Nextel’s network. It has been estimated that Sprint can upgrade to EV-DO and EV at a cost of $1B, or about $5/ POP. This report states that the Nextel upgrade with Flarion will require a “forklift”, yet no detail comparisons or discussion of the equipment required (other than “forklift”) is provided. In conclusion, based on the lack of supporting detail and emission of known contrasting detail (EV-DO Rev A) detracting from such positive support, one wonders why the effort to publish such a report favorable on Flarion? Future IPO business??