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

To: qveauriche who wrote (134976)	7/24/2004 12:31:11 PM
From: carranza2	Respond to of 152472

This Harvard prof proposes no governmental interference when the format is superior, as is the case in CDMA. A long dismal article from which I have extracted a pertinent quote: The role of antitrust should be, basically, to get out of the way here. The various pump-priming measures discussed above may well look predatory, but the superior format must be allowed to engage in actions that can help ensure it survives and prospers, particularly if it is not the first format offered to users. If the superior technology is offered first, we are unlikely to see a sustained attempt to dislodge the leader by the owners of inferior technologies, unless they expect that they can achieve their ends through political means, since their expenditures in the market are likely to be futile. If government is to do anything useful, it should help to ensure that the capital market is functioning properly so that new technologies have access to sufficient financing. The recent episode with Netscape and its enormous market capitalization seems to indicate that such financing is more than abundant. utdallas.edu Let's also not forget the role of international trade politics in this area. Recall that Microsoft was not sued until it had become so overwhelmingly established in a global sense that even a worst case decision would have simply divided it into three or four segments which would have by themselves been global powers. I don't see any substantial domestic antitrust problems for Q from a political standpoint because it is not yet sufficiently established on a global basis. So long as the Justice Department is in the hands of the GOP or centrist non-lunatic Dems, Q's role as a potentially major instrument of US foreign trade will never be challenged by any US government. Predatory pricing cases brought by individual corporations are of course possible since no one can predict what any one company will do. I see this risk as presently being nil, too. If I recall correctly from an antitrust course that I took many, many years ago, a predatory practice is one that would not be otherwise be profitable; it must also be proven to be designed to drive competitors out of the market. Lowering prices to consumers to below cost until competitors are driven out, then raising prices once they have left, is the classic example. Using this test, it is clear that a predatory practice case brought by an individual corporation against Q is going to be very difficult to pursue. It's great that we're discussing these issues. I hope the discussion eventually relates to a real problem instead of to a theoretical one. I guess the fact that it's on the plate is suggestive of good things to come. vbg

To: qveauriche who wrote (134976)	7/24/2004 4:23:47 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 152472

qveau, thanks for elucidating the issues. Not to mention managing to decipher what I was trying to describe. When I read what I'd written, I couldn't understand it, so I'm impressed that you not only understood what I was meaning but were able to explain how it anti-trust, anti-monopoly, anti-anti-competitive pricing, not to mention anti-predatory pricing laws cover the situation. I understand what you mean and that makes sense. I would not want to see you try to explain that to a jury of ordinary blokes and blokesses picked off the street. They'd be bewildered with the chain of logic within a couple of sentences. I wonder how predatory pricing laws would apply to my proposed Globalstar pricing wherein the minutes are given away until the system gets busy, then the prices are jacked up until supply and demand balance whereupon another constellation would be built, when prices would again be lowered below cost. Such pricing would stop competitors and during the supra-competitive phase, when the system is getting busy, profits would be enormous and wayyyy past the cost price and any prices competitors might charge. But they wouldn't dare enter the market because the next constellation would see prices slashed again, though not to free because the combined systems would be still quite busy. The overall impact would be harm to subscribers because they would be paying more than a competitive market would dictate. Hmmm. On second thoughts, the overall prices would be lower than having competition charging sufficiently to be profitable. We actually had two stupid competitors charging sufficient to be profitable, but of course very few subscribers signed up because the prices required to make two systems profitable while being used not very much were so high that few subscribers bought the services. But I can see how a court could easily argue that giving away the minutes to fill the system quickly, ready to jack up the prices to supra-competitive levels, and to keep competitors out in the meantime, would be illegal. It's seems to me there's a lot of smoke and where there's a lot of smoke and mirrors and money, there are fire, lawsuits, judges and decisions which end up with large transfers of funds from the evil monopolist to the envious. I will keep a weather eye on this space. Thanks for your thoughts on the matters. With W-CDMA ASICs at low market share, as pointed out, there is obviously not yet a monopoly in hardware that would bring on the hyenas. I'm not so sure about the perpetually leveraging intellectual property and software realm. Since the unit costs of software and intellectual property are near zero when spread over a billion buyers and are already very low, as shown by 90% profit margins, it's obvious that supra-competitive prices are being charged, and consumers are being harmed as they could buy those products cheaper in a free market, if competitors were able to sell their software and intellectual property without having to face a giveaway product from QUALCOMM. Like an octopus, QUALCOMM could keep expanding the portfolio in all directions, giving away with one arm, keeping competition out, to take with 3 others, pulling everyone and all the money in the world to their greedy central beak. Okay, that's not strictly a legal argument, but I think that's the way people start to think, if they even think that intellectual property should have any protection at all. As C2 says, that will be an excellent problem for shareholders to have. Mqurice