Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: tero kuittinen who wrote (10857)	5/25/1998 4:21:00 PM
From: Caxton Rhodes	Respond to of 152472

Tero- You're right QCOM's stock performance has sucked over the last two years. Korea, no significant China expansion, and the nextwave disaster have resulted massive disappointment, while most other wireless players have doubled. Still North America IS cdma, and it seems the true benefits of cdmaOne vs. GSM(and perhaps wcdma) are soon to be demonstrated by Sprint. How significant they are remains to be seen. China is a must for QCOM and it's way too early to call victory or defeat. What is your take on the IPR battle required for wcdma? You're posts imply that q's aren't important, why do you think so? Qualcomm's arrogance combined with "group dislike" of qcom, indicate that the IPRs ARE required and valuable. Do you believe that sooner or later GSMers won't have to pay? Both sides are playing hardball. Q is a tiny infrastructure and handset maker, but they if they have THE IPRs, if they give them away, they're dead. That's the issue, give them away and try to play with the big boys and get crushed as you predict, or keep them and have the other players fund q's attempt to catch up in handsets and infrastructure. Another question is which of the big guys are a better buy today? Who has the bigger upside vs. risk. It seems like LU and nokia are sure winners over the next ten years but are pricy. For q investors the big question is the upside of qcom worth the risk. At least the premium for cdma "hype" is finally gone, and its time to put up or shut up. Would appreciate your thoughts on IPRs and valuation. Caxton

To: tero kuittinen who wrote (10857)	5/26/1998 2:01:00 AM
From: Asterisk	Read Replies (2) \| Respond to of 152472

O.K. Tero, lets talk. First up every paper in the world has a slant, as long as you know that and know what the slant of the particular paper is then you can for the most part get past it. For instance noone in their right mind could claim that the Wall Street Journals coverage of the CDMA question in general and QCOM in specific could be called neutral. They did a hatchet job from the beginning and are still doing it in the end. By the same token noone could claim that the CDG is an impartial spectator and commentator. If you take the average of their views and filter the information then you can find a kernal of truth. If you take the word of ANY paper as inviolat then you are not as smart as you seem to patently be. If you look at all of the major advances that QCOM and its associated engineers have made (and patented) they for the most part happened before 1992. So when your Finnish university began its research it was already standing on the shoulders of those advances. That is pure timeline. On a purely technological standpoint lets consider what has happened since then. I would be willing to bet a years salary that the QCOM engineering team has not stood still. They have a vested interest in advancing CDMA in general and IS-95 as a specific flavor. Since they had at least 3 years of head start (QCOM started in '89 right?) they would most likely have made better progress than someone who only started in '92. It had nothing to do with talent, it has to do with focus and momentum. You say that the large Asian conglomerates did not make any significant mark into the GSM market. In the past it has been said here on the thread that if you started from scratch and had no patents to trade then a liscence for GSM would be much more expensive than one for IS-95. This is because the IPR for GSM is spread all across the major European companies that produce it. In that atmosphere you CANNOT call GSM an open standard that anyone but a select few have any chance of producing. In your other point on that thread of thought you say that the major Asian conglomerates have accepted GSM. I saw NTT, but I also saw that Denso (a division of Toyota I believe) Sony, Matsushita, Hyundai, Samsung, and LG all accepted CDMA. If those aren't some of the larger conglomerates of Asia then please point out who is. And last but not least let's talk profit margins and production capacities. QCOM never made a phone before last year, and now they have announced around 600k per month with an eventual target of 700k+ per month. I think that you had better get your facts straignt before you come back in the deep end of the pool. Michael

To: tero kuittinen who wrote (10857)	5/26/1998 12:43:00 PM
From: Gregg Powers	Read Replies (1) \| Respond to of 152472

Tero: With all due respect, your comments to John had to be some of the most comical revisionist drivel that I have read on the CDMA-TDMA topic. Up until 1997, Ericsson and Nokia were busy telling Wall Street that CDMA would not work commercially. You may not believe this, but I was on the conference calls and I lost weeks of my life tracking down sources inside of the Regional Bell Operating Companies to refute the commentary of our Nordic friends. These companies may claim today that they were busily developing W-CDMA, but back then they were fervently hoping that QCOM & CDMA would die on the vine, thereby preserving their GSM hegemony. As for Qualcomm's handset margins, you once again resort to hyperbole over analysis. Have you attempted to deconsolidate Qualcomm's segment profitability? Did you forget about the modest exogenous event known as the "Asian Crisis" or do you blame Qualcomm for Hansol's inability to perform under its contractual obligations or Samsung's slowdown in ASIC consumption? Do you understand that QC transfers ASICs to QPE at market prices, so that ASIC gross profit margin (likely in the 40%+ range) incorporates profits that could be attributed to handset production? Do you understand the Sony relationship whereby QC sells ASICs, collects royalties and generates manufacturing economies, but deliberately earns little manufacturing profit at the joint-venture (i.e. QPE level)? Have you factored in general handset royalties, which are reported as revenue, but could actually be considered a component of handset operating profits? Do you understand the magnitude of the company's infrastructure start-up losses and other DISCRETIONARY investment decisions? It is amusing to me that the same fraternity that swore up and down that CDMA would not work now claims that their pet companies invented the thing and that Qualcomm is foredoomed to profitless prosperity. Yes, I am disappointed by Qualcomm's stock performance over the last two years and clearly the company has suffered some start-up problems, but do you really blame Qualcomm and CDMA for South Korea's difficulties? You seem to forget that CDMA is barely out of the cradle, having been commercially deployed for just over a year and one-half. In contrast to your dire view, it is amazing to me that this "late-to-market" technology has dominated North America, is rapidly spreading South and East, and has prompted a technological revolution (i.e. new standard) even in fortress Europe. Over the last two quarters, QC has suffered from Asia's financial dislocation, but network deployment has continued unabated throughout the world. Given South Korea's problems, and their impact on Qualcomm, are you suggesting that QC's recent margins represent the company's normalized opportunity? That would be a pretty self-serving (more likely self-deluded) conclusion in my mind. However, this debate is pointless, because you have your opinion and I have mine--but I suggest we revisit this debate after QC reports its September quarter (which should reflect a return to more "normal" operating results). As for W-CDMA, it has become very clear that contrary to European hopes and dreams, direct sequence spread spectrum has won the air interface war. It is also clear that, despite their protestations to the contrary, the Europeans cannot do mobile W-CDMA without QC IPR. It is really pretty simple Tero--if ERICY or NOK could do W-CDMA without QC IPR, THERE WOULD BE NO STANDARDS DEBATE. However, both ERICY and NOK understand that they will need to deal with the QC IPR issue--both have acknowledged this in public forums. Meanwhile, they are struggling to carve out a proprietary position that yields as little advantage as possible to carriers that have already deployed IS-95--this is neither hard to understand nor difficult to confirm. You acknowledged previously that the Europeans deliberately deceived their customers about the relative merits of TDMA-based GSM and CDMA. Now, you now expect us to believe that yours is a position of unvarnished objectivity, while our views are subsumed by pro-CDMA bias? Sure. Please show us where the Europeans have deployed their "working prototypes" of W-CDMA commercially (and while your are at it, please try to explain how and why W-CDMA is better than IS-95C). Please clarify exactly what you believe the Ericsson and Nokia positions are vis-a-vis QC IPR. And finally, please explain why the Europeans spent the last five years pushing an obsolete technology while attempting to thwart the development of CDMA as a worldwide technology standard (while now claiming to have been developing CDMA all along). Tero... Nokia is a fine, nimble company that produces quality products and particularly fine handsets. Qualcomm management has, on several occasions, expressed admiration for both NOK's design and engineering talent. That doesn't change the fact that NOK bought an IS-95 license from QC because and it doesn't change the fact that NOK will need a W-CDMA license. You attempt to reinforce your position with hyperbole (i.e. DDI is bankrupt??), but I have always believed that the person who yells the loudest has the least to say. Best regards, Gregg