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

To: slacker711 who wrote (56478)	10/31/2006 10:04:21 AM
From: slacker711	Read Replies (3) \| Respond to of 196765

ML has a $60 price target on Q....this is from 10/26. QUALCOMM Inc. Getting our hands around WCDMA in Japan ?? Apparent inventory build at NTT DoCoMo There could be excess inventory of WCDMA handsets (based on QCOM patents & chips) at NTT DoCoMo that may take several quarters to work through. This is corroborated by Merrill Lynch Japan Telecom Services analyst Yasumasa Goda. Japan is currently implementing wireless phone number portability which often leads to subscriber churn and demand for new handsets. However, that effect is expected to be muted, which in our view, could partially explain the excess inventory. Limited upside to 3G (WCDMA) shipments near-term? There could be downside risk to our 100mn forecast for WCDMA handsets in C2006 due to excess inventory in Japan and sluggish demand from Western Europe. The risk to Qualcomm’s royalty revenue is exacerbated by the fact that average handset selling prices (from which royalties are derived) are the highest in Japan. However, we are optimistic that seasonal 4Q demand and new handsets from Nokia, Motorola and other leading vendors could turn the situation around. We provide recent 3G subscriber trends from Japan on pg. 2. TI comments may not apply to Qualcomm We believe that recent comments from Texas Instruments may be company specific. DoCoMo's new lineup (the 903 series line) relies on some of Renasas' (Hitachi's app processor arm) chips, meaning that there is potentially less demand for TI's OMAP app processor chip. Thus, while this may have a double impact on TI it is not necessarily related to Qualcomm. In addition, TI’s comments on its conference call about front-end loaded demand for its OMAP processor gives further credence to our belief in the company specific nature of this weakness. L-T trends appear healthy; Maintain Buy and $60 PO In our view, the robust WCDMA demand from the rest of the world may still be sufficient to offset any temporary inventory situation in Japan in the near-term. We maintain our Buy rating and $60 price target based on Qualcomm’s dominant position and long-term growth prospects for WCDMA. We believe that new product launches and continued price declines (e.g. Nokia recently lowered prices on its N-series 3G phones) should act to catalyze the market for WCDMA-based phones.