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

To: bananawind who wrote (10108)	4/21/1998 7:19:00 PM
From: bananawind	Read Replies (2) \| Respond to of 152472

A few CC high(and low)lights... first the bad news- There was a quality control problem with connectors in the handset business, causing them to hold up shipment in some cases and to rework all their inventory. The major problem was with accessory connectors that were out of tolerance (sounds like a supplier problem), but also with some "interboard" connectors that were occasionally failing (so they decided to rework them too). In some cases there were financial concessions to customers associated with these problems. Q-phone sales continue to be weak, albeit a little better than last quarter. The dual mode Q won't be produced in quantity until June, so the full impact of an improving margin from product mix won't be felt until the latter half of the calendar year. The June quarter may be somewhat flat compared to March (ie. $.25 eps) due to the above and expected lower license (not royalty) fees. My guess is some of the Wall St. boy's with real short fuses will not look kindly on this part. And now the good news- Despite the connector thing, Communications gross margin improved. This was due to better contribution to margin from Omnitracs, asics and infrastructure. The impression I got is that infrastructure is about to turn the corner. They've just made the first commercial shipment of a G* gateway ( to China) and this should ramp up from here. The license revenues may be down sequentially next Q because they were so outstanding this quarter. Said they signed more deals than expected, and more than they have announced. May announce some shortly but have to get agreement from the licensees first. Their recurring reference to unannounced deals has me thinking something real juicy has already happened. Mexico is getting closer to closing and "we will be a major player in that marketplace..." Shipments associated with Mexico could occur as early as this fall, but more likely next fiscal year. March quarter was probably the low point for the impact of Korea on royalties, and they should continue to grow sequentially from here. ASIC's are already shipping to one Japanese customer and another is getting close. Expect this to ramp up. QCP capacity is at 550,000 to 600,000 per month (will be ramping up dual Q line to 150,000 per month) and they are still producing flat out at capacity. Pretty much the usual low key production that we've come to expect. Some of the analysts seemed denser than usual. -JLF