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 (13407)	8/6/1998 10:08:00 AM
From: J.B.C.	Respond to of 152472

Tero, You're almost as good as our Pres. Clinton. Why don't you just answer Greggs question? Jim

To: tero kuittinen who wrote (13407)	8/6/1998 10:43:00 AM
From: brian h	Read Replies (1) \| Respond to of 152472

Tero, You remind me of Angeleo CiCi on ORBI board. Where is he now? NOKA can grow 50 % in handsets or revenue? A big deal? The very company you intentionally ignore just grow a company in revenue (from 500 millions to a 3 billion company since 1996) and handsets and infrastructure (from zero to 600,000+ a year since late 1996). If your analysis or bragging worthy of reading and consideration, I will say this train (or trend) on QCOM will not stop as you claimed on your beloved company (NOKA). Which company has a better potential to grow from a 3 billion to 10 billion or even 15 billion while everything it owns is on the driver seat? Or your beloved NOKA grow from 15 billion to 30 billion while everything you claim are this company is good at handset designs and colorful handsets? Answer is pretty clear to me. Brian H.

To: tero kuittinen who wrote (13407)	8/6/1998 11:12:00 AM
From: Gregg Powers	Respond to of 152472

Tero: Thanks for a very fair response. Here's where I differ with you. There probably is not a technology in the world that cannot be circumvented with enough time, effort and dollars...so I do not presume to believe that QC could forever preclude Ericsson from deploying a CDMA-style air interface. However, your fact base is wrong on a very, very key point. Ericsson is NOT in deployment with W-CDMA ANYWHERE THE THE WORLD. W-CDMA, as a standard, is still being tweaked and tuned and Ericsson--to date--has conducted "trials" and shown providers "demonstration" equipment--that's all. Our legal counsel is very clear on this point.. A company can do just about anything it wants in a lab...it can show these efforts to potential customers...but infringment (when it exists) takes place at the point when the company tries to SELL its product to a third party. Reasonable people can disagree...but here is what I adamantly believe. Qualcomm can stop W-CDMA dead in its tracks for years. CDMA has proven difficult enough to deploy for companies with unfettered access to QC IPR (Motorola comes to mind); if Ericsson et al have to kludge their way around to a non-infringing standard, modifying everything from the basic waveform to the technique for soft-handoff, I would posit that it will take years-and-years for W-CDMA to see the light of day. In the meantime, cdmaOne and cmda2000 will be commercially available and continue to deliver a superior value proposition to TDMA-based GSM...remember that in trying to do W-CDMA, Ericsson has implicitly (and maybe even explicitly) acknowledged the limitations of its current air-interface. Ericsson has clearly mobilized the European equipment providers around its W-CDMA standard and has been marketing ferociously to its customers. Getting DoCoMo into its camp, by conforming its original proposal with DoCoMo's concept, was a stroke of brilliance. Ericsson is clearly trying to vilify Qualcomm in the court of public opinion and damage IS-95's prospects by portraying this debate as "the North Americans trying to force their inferior technology down the world's throat". That's a nice marketing spin, but that is all it happens to be. The truth is, Ericsson needs QC's IPR to make W-CDMA work and the company believes that the carrot...a dramatic expansion of QC's worldwide royalty opportunity...is more than sufficient consideration for Qualcomm's IPR position. Qualcomm management believes otherwise. There are clearly costs for both sides. Qualcomm would love to see the world go CDMA and collect royalties on every wireless network, handset and ASIC sold globally for the next decade and beyond. By slowing down the migration to CDMA, Qualcomm does reduce its economic opportunity to the continuum of IS-95 deployments. That is not an inconsequential cost. Ericsson, however, has a bigger problem in my mind. TDMA-based GSM is under attack and the dike is starting to spring leaks. If ERICY is estopped from doing W-CDMA for long enough, and its customers understand that the company will not be able to deliver a high-bandwidth, spread spectrum solution, then more and more operators will turn to IS-95 or QC's CDMA overlay strategy will gain momentum and Ericsson will inexorably begin to lose market share. The stakes are clearly very high. I can understand why somebody with a Eurocentric view of the world would view Nokia as a safe haven in the war. Nokia has placed bets on both sides, although it does not appear to be developing CDMA-based infrastructure. My problem with your analysis is that I believe you fail to adequately weight the relative market valuations of the two enterprises (i.e. Qualcomm and Nokia). Nokia's market value exceeds $40 billion and clearly reflects some, if not all, of the company's success. Qualcomm's market value is just $4.3 billion...and one could make a salient case that $1.5bb of this value could be ascribed to assets other than the company's CDMA efforts (i.e. Omnitracs and Globalstar equity investments etc.). Given the valuation disparity, IS-95 does not have to capture anything near 100% of the worldwide market for Qualcomm to be an extremely attractive investment. People really get dunderheaded on this issue. You should, for example, sit down and calculate the net present value of QC's royalties deriving JUST from the major markets where IS-95 is being deployed (Canada, U.S., Mexico, Chile, Peru, India, Russia, Ukraine, South Korea and Japan). Do the math and weight the outcome against a $3 billion residual market valuation. I think you will be very surprised about just how risky Qualcomm is NOT. After you finish this exercise, think about the company's "call option" on W-CDMA and the world-wide deployment of direct sequence spread spectrum. Tero...you and I have exchanged enough e-mails that I know you are smart, thoughtful and (despite your public personna) quite reasonable. I am suggesting that you think through not just how Nokia is positioned today vis-a-vis Qualcomm but how Nokia is valued and how Qualcomm is valued relative to their business opportunities and forward potential. While I am not expecting anything seminal from you...I am optimistic.... Best regards, Gregg