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

To: JScurci who wrote (10852)	5/24/1998 7:56:00 PM
From: bdog	Respond to of 152472

Thanks JScurci, I needed that . . . the thoughtful and on point response to tero, I mean. I must admit he got to me a little. The past two years stock performance has been pretty disappointing. R.P. Svoboda's post was very much on point here too. Thanks to both of you. Its sometimes a bit of a drag being too prescient (early) as a buy and hold investor don't you think?

To: JScurci who wrote (10852)	5/25/1998 9:14:00 AM
From: tero kuittinen	Read Replies (3) \| Respond to of 152472

Hi John, I've been accused of being a Swedish engineer before... it's always disturbing. I'm a Finnish biochemist with no ties to Nokia (apart from stock ownership). I do have a different point of view to mobile communication industry, since Finnish newspapers tend to report much more widely and accurately on the topic than even American specialist publications, which tend to be puppets for the sinister CDMA enclave. A good example is the thoroughly distorted reporting on W-CDMA that we see in US sources. Of course Nokia and Ericsson are choosing CDMA as the GSM upgrade standard... the decision was made around -92 or -93. There never was any talk of using purely GSM based solutions for the 3G. Nobody's "feverishly" developing W-CDMA as some sort of kryptonite to vanquish Qualcomm. W-CDMA was in development long before anyone had even heard of Qualcomm. The university of Oulu conducted CDMA research in collaboration with Nokia throughout the nineties, starting from 1992. And this is why Nokia and Ericsson have a credible case of putting W-CDMA together without major licensing fees from Qualcomm. They've been working on it fo almost a decade. And now W-CDMA is the best bet for a standard that will unify European and Asian markets. NTT-Docomo is the world's biggest mobile operator and it embraces the Nordic standard. Some semi-bankrupt nonentity like DDI can root for IS-95 and the American 3G model all it wants. NTT rules the Japanese market and has the biggest influence on neighbouring Asian countries. As far as the production numbers are concerned; Nokia is holding approximately 24% of the global market share in mobile phones right now. You can't be serious in claiming that Qualcomm produces half of Nokia's numbers. That would give Qualcomm 12% of the global market, when in reality the company is nowhere near reaching even 4% this year. So your view of the global marketplace is completely out of whack. I suspect many people in this thread have equally skewed perception of Qualcomm's importance in the global context. I don't know about Nokia's CDMA phone profit margins, nobody outside of the company knows, but that doesn't really matter. Nokia's overall profit margin in the handsets is around 18%. That's over twice as high as Qualcomm's... and here's the hook: Nokia is already competing with twenty companies in the GSM marketplace, the most competitive and technologically mature standard. But Qualcomm's margins are already much lousier, even though it hasn't faced any real competitive pressure. The company missed the chance of capitalazing on its early lead and it will never have a shot at that golden moment again. Nokia and Motorola didn't produce their own chipsets because they felt threatened by QCOM. They did it because QCOM's demands were exorbitant. This company manages to alienate valuable collaborators with suave ease. As a result, Nokia's and Motorola's CDMA entries are old-fashioned; and that will play directly into the hands of the competing standards. These are the brands that people know and trust. CDMA will be curtailed by the lukewarm attitude from world's leading manufacturers, stemming directly from Qualcomm's naked, shortsighted greed. You asked about the early days of Nokia... the company's take-off was so spectacular precisely because it had sky-high profit margins in the early days. Margins will always drop as competition increases. Since Nokia started out with 40% even a steep drop still yields it 18% today. But if Qualcomm is starting with 7%, guess what those Asian companies will do to the numbers in a year or two? Moreover, Asian companies never managed to crack the GSM market, so Nokia hasn't had to worry about huge devaluation advantages of its rivals. Qualcomm is in much worse position. The only place that questions the relevance of W-CDMA is USA, because it is in the process of being left out of the loop. Both Nokia and Ericsson already have working prototypes of W-CDMA networks and terminals. The commitment of NTT, Siemens, Nokia, Ericsson, Alcatel, Motorola, the Japanese giant conglomerates, etc. speaks for itself. The promise of W-CDMA bowing within twenty months is already influencing the buying decisions of Asian nations who want easy expansions for their current networks and compatibility between European and Asian standards. sincerely, Tero