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

To: Dave who wrote (15287)	9/21/1998 1:15:00 PM
From: Gregg Powers	Read Replies (1) \| Respond to of 152472

Dave: I am not being specific to you, but there is a tendency for investors to hop from concept to concept, issue to issue, and miss the overall picture. IS-95 is being deployed in over thirty countries, including some pretty major markets (like the United States). For all the talk of GSM's success, Europe, in toto, is only 1.5x bigger (from a population standpoint) than the U.S. GSM has more subscribers today, but that is because the technology was deployed well before CDMA...but CDMA's geographic footprint is expanding rapidly. Qualcomm, in my judgment, would have a nice business--albeit with less overall total growth potential--if it were to just continue developing the markets in which IS-95 has ALREADY BEEN deployed. While 3G represents a major inflection point for the Europeans--who need to transition TDMA-based GSM to a more robust air interface--QC's business can grow simply based on the maturation of existing IS-95 deployments. As for forward estimates...I wholeheartedly agree that analysts' estimates are suspect under current economic circumstances. But, again there is an importance difference between Nokia and Qualcomm. Nokia's business model is mature (i.e. it is operating on a normalized basis), so its earnings growth is very much dependent on expanding revenues rather than margin expansion. Qualcomm's business model has been suffering from manufacturing problems on the handset side and start-up losses within the infrastructure division. By all indications, the handset manufacturing problems have been corrected..which should allow for substantial margin expansion. Beyond this, the infrastructure backlog (in the U.S., Mexico, Chile, India, Russia and Ukraine) is large enough to at least provide for sharply reduced losses. The point is that QC's profitability--at this juncture--is more dependent on management's actions than the overall business climate. Said another way, I am far more confident that QC is trading at only 16x forward earnings than I am that Nokia is ONLY trading at 26x forward earnings. Hope this helps! Gregg