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

To: limtex who wrote (10898)	5/27/1998 8:11:00 AM
From: straight life	Read Replies (1) \| Respond to of 152472

QUALCOMM Considering Spin-Off of Operating Company Investments SAN DIEGO, May 27 /PRNewswire/ -- QUALCOMM Incorporated (Nasdaq: QCOM - news) today announced that it is considering a transaction in which it would transfer certain of its investments in terrestrial-based wireless telecommunications operating companies to a wholly owned subsidiary of QUALCOMM, followed by a spin-off of the subsidiary to its stockholders. QUALCOMM may retain up to 20 percent of the new company's shares after the spin-off. Following the spin-off, QUALCOMM expects that a public market would exist for the new company's stock. As part of QUALCOMM's strategy of supporting the commercialization and sale of its Code Division Multiple Access (CDMA) products and technology, the Company from time to time enters into strategic alliances with domestic and international emerging wireless telecommunication operating companies. These alliances often involve the investment by QUALCOMM of substantial equity in the operating company, as well as a commitment by the operating company to purchase certain CDMA equipment from QUALCOMM. In a number of these operating companies, QUALCOMM may also assume a significant role in the operations and management of the entity. QUALCOMM believes that, although its strategy has benefited the Company and the advancement of its CDMA technology and products worldwide, spinning off these assets at this time would be in the best interests of its stockholders and would positively impact QUALCOMM's earnings in future periods following consummation of the transaction. Without the spin-off, according to applicable accounting rules, QUALCOMM would be required to continue recognizing a share of certain of the companies' start-up operating losses and would be limited in its ability to recognize revenues from equipment sales to some of these companies. Most critically, these investments create potential conflicts with customers of the Company's products who compete against such operating companies. Finally, QUALCOMM believes that the value of its operating company investments are not fully recognized in the Company's current stock price. The proposed transaction will likely involve a majority of QUALCOMM's investments in terrestrial-based wireless telecommunication operating companies. In support, QUALCOMM will make a substantial funding commitment, including but not limited to an up-front cash contribution and financing in the form of lines of credit or otherwise. The distribution of the new company's shares may be a taxable dividend to QUALCOMM's stockholders. If taxable, the dividend would equal the lower of 1) the average, price per share of the spun-off company's stock on the first day of trading following consummation of the transaction or 2) QUALCOMM's accumulated earnings and profits through the end of fiscal 1998 (expected to be approximately four ($4) per QUALCOMM share). Should the spin-off occur, it is anticipated that Harvey P. White, QUALCOMM's current president and a member of the Board of Directors of QUALCOMM, would resign these positions and would serve as chairman, president and CEO of the newly formed entity. It is further anticipated should the transaction occur that Richard Sulpizio, currently QUALCOMM's chief operating officer and executive vice president, would assume the role of president of QUALCOMM. The transaction is expected to be completed by the end of September 1998 and is subject to approval by QUALCOMM's Board of Directors among others. Headquartered in San Diego, QUALCOMM develops, manufactures, markets, licenses and operates advanced communications systems and products based on its proprietary digital wireless technologies. The Company's primary product areas are the OmniTRACS(R) system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services), CDMA wireless communications systems and products and, in conjunction with others, the development of the Globalstar low-earth-orbit (LEO) satellite communications system. Other Company products include the Eudora Pro(R) electronic mail software, ASIC products, and communications equipment and systems for government and commercial customers worldwide. For more information on QUALCOMM products and technologies, please visit the Company's web site at qualcomm.com. Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including the ability to structure the transaction to positively impact QUALCOMM's earnings, the ability to recognize revenue on sales to spun-off companies, the ability to preserve customer relations and avoid conflicts following the spin-off, the impact of the spin-off on QUALCOMM's stock price and the tax consequences of the transaction to QUALCOMM and its stockholders, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 28, 1997 and most recent Form 10-Q. QUALCOMM, OmniTRACS, Eudora Pro and QEDesign are registered trademarks of QUALCOMM Incorporated, QCore and QCell are trademarks of QUALCOMM. Globalstar is a trademark of Loral QUALCOMM Satellite Services, Incorporated. cdmaOne is a trademark of the CDMA Development Group. SOURCE: QUALCOMM Incorporated (expected earnings $4 a share this year... take that, Teru!) PS- this could be GREAT ...except for the tax angle...

To: limtex who wrote (10898)	5/27/1998 6:11:00 PM
From: Maurice Winn	Read Replies (5) \| Respond to of 152472

Limtex, I wish I'd written what Gregg wrote! That was excellent [no doubt because I agree with it all]. I think what's going on here is that you are blaming Qualcomm, the adherents, the technofreaks, for your failure to be an accurate technical analyst. I'm not meaning to be smart alecky or critical, just accurate on what's going on, and lots of people are feeling like you do, despite their best endeavours to understand the technological and market merits of Qualcomm. Now they've thrown you another curve with the operating company spin off idea. Which I think is great. Qualcomm becoming a phone company has always made me feel diluted. I understand the need to get cdmaOne into use, so if nobody else will do it, they better make handsets. And infrastructure. And start a phone company. But I don't believe the expertise they have to sell is in the phone company business at the retail or even wholesale level. They are quantum mechanical, wave function, software, research and developers. Hawking handsets to Indonesians at so much per minute is not their forte. Incidentally, the spectrum they [Ozphone] won is not in the big cities, so their plan is perhaps to value peripheral phone services more. By that I mean cdmaOne is most effective on the edge of systems where it gets great coverage. WLL might be more important in those areas too. In any event, they now have USA, Mexico and Australia committed. New Zealand auctions in a couple of months [postponed from June]. So it makes sense that they set up a separate company to be the phone operator. Same as they set up NextWave Telecom for USA. Back to my point. People frustrated and disappointed with the share price are being technical analysts, trying to time the market and indifferent to whether it is rotten eggs, software or phones which they are trading. The technology attracted, but then your, and others, share owning positions became technical analyst positions rather than simply investors. Of course the value of the company should be reflected in the share price, but it isn't necessarily so. I like it when it is! But I don't worry if it isn't. And buy if it gets too temptingly cheap. Okay, so you are a technical analyst, not an investor. So think of yourself as competing with market psychologists. Like D E Shaw, the big time trader in New York, who hires PhD mathematicians, uses lots of complex algorithms to model your and others buying and selling behaviour. And their own buying and selling behaviour is no doubt also included in their models. Like Warren Buffet, who is as patient as a hunting cat. Who doesn't get the jumps because the masses don't immediately vote his shares much more valuable. So you are up against some very smart, very rich, very fast, very experienced, people who have very high quality computers, market information, broker and information access. Who can trade instantly. Who will buy your shares in another few days by the sound of it. They already have bdog's. They probably have a readout of the Qcom shareholder demoralisation index. When it reaches 0.34159, they'll buy 10 million shares. That's what I think is going on. Not intended to be smart. This is Genuine Advice, which is how I treat it for my own purposes. One day, I might even take them on, but I'm not ready yet. Well, I take them on in a small way in that I buy at demoralisation index of 0.34160 - heading them off at the pass, but making less money as a result! Mqurice [Ramsey, sorry, I think this exceeds my 250 word limit]