To: john griffin who wrote (6620 ) 12/19/1997 3:07:00 AM From: Frank Byers Read Replies (2) | Respond to
The drop in Ericy, QCOM and others (but not MOT, for once thank God) is probably due to the perceived slower wireless sales in Asia next year. How can the growth in Asia continue as it has for the last 2 years when everyone's net worth has declined by 1/2 due to currency losses? While these losses are not actually realized unless they want to buy imported products (i.e. cell phones, etc) the people feel the loss and will pull back on discretionary spending. Since these markets have had cellular long enough that the early adopters have already got phones, the future growth was going to come mainly from the marginal consumers. This is the problem, because those people that could not afford a phone before, surely will not be able to now. I suspect the cellular operators will try to absorb the price increases in handsets (due to currency valuation changes) by increasing the phone subsidy but I still think the growth rate for '98 will be only 1/2 the growth rate in '97, and the monthly minutes of use will decline by 10-20%. Another side effect could be that the lower margin, less costly models are the bulk of the sales. Since QCOM has a pretty limited product line, I'm not sure how they play this trend if they need to. Doesn't look good for Q-phone sales in Korea though, IMHO.
