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

To: Dan Ross who wrote (6323)	12/12/1997 6:07:00 PM
From: Asterisk	Read Replies (2) \| Respond to of 152472

From one of the Geeks on the thread (I follow for the technical news not the financial) I can totally understand the panic selling but lets take a short REALITY break here folks. The price of QCOM asics is denominated in US dollars, that price WILL NOT fall due to the fact that Samsung and LGI need more. I would assume from my short econ courses in college that as demand rises the price will follow. They have moved to a new cheaper to manufacture main asic (remember the announcement about the 2300) so that means that the margins will increase. And every chip they can make is sold, I am a little lost on the down side of that news. Even if Korea makes 0 phones (which of course they won't) Qualcomm has enough other customers in Japan to buy them out. So, lets just assume for the worst case that I am totally wrong and they lose money on asics. Fine then lets look at the phone side. For now lets assume that QCOM sells 0 phones to Korea (unrealistic, but it allows some worst case thinking). Every QCP-2700 and QCP-820 that they can make they can sell to American carriers (Sprint, Primeco, BAM, Airtouch, etc...) Even if the profit margin of these phones were the same as the phones they were selling last year the increase in production would offer a large profit over last year. But since these are a newer generation I am assuming that the lessons learned in producing for one year went into them and their profit margin is wider. As far as the Q phone goes, even if the contract that Hansol (Korean phones) signed falls through all of the production that went to them I assume will be shifted to Sprint. As far as I know it is still hard to find a Q in a Sprint store. This would indicate to me that the demand is ahead of the supply. But let's assume that QCOM makes no money on phones at all (completely unrealistic but hey, humor me). That isn't all for Qualcomm. They still have OmniTracs, as far as I can tell their major cash cow. They have Eudora, and NOW that are profitable businesses. They have WLL contracts and Infrastructure coming on like a freight train from countries not anywhere near Korea (Russia, Nigeria, India, Poland). Lets reexamine. I believe that all of my assumptions here can be substantiated from press releases and solid guesses. I think that the current sell off is totally hysterics, that people are scared. When people slow down to take a good look at the fundamentals of this company they will realize that even worst case the loss of royalties are not as important this year as last. People are quoting last years numbers like they are gospel, well folks they ain't. Since last year QCOM has matured, they have broadened their product offerings from one flavor of phone to 2 (both with much better margins). They have moved away from relying on royalties to becoming one of the major players in the communications game in only a VERY few years. You count QCOM out and you will be making a huge mistake. Right now is a buying opportunity. While the hysterical jump ship those buyers are raping them for all they are worth. 80+ was always a pipe dream but 60 and 70 is realistic. As I sit on my stock and grin I believe that QCOM will come out in the end smelling like a rose! Good Trading

To: Dan Ross who wrote (6323)	12/12/1997 6:14:00 PM
From: Brian Lempel	Read Replies (1) \| Respond to of 152472

Dan, I have to agree with you. I found all this out a day too late... QCOM official still hasn't called back. I look forward to talking to him. If it weren't for the royalties, QCOM wouldn't have earned too much last quarter. While other segments' profitability should be a lot better this quarter, royalties will be off 50% from where they would have been had this thing not blown out of control. Unfortunately, I doubt there is much to do at this point except to grin (not what I'm doing) and bear it! Given QCOM's potential looking 1-2 years ahead is phenomenal. A price dip below 40, IMO, would be extremely unlikely. Brian