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

To: marginmike who wrote (15360)	9/23/1998 5:38:00 AM
From: tero kuittinen	Read Replies (1) \| Respond to of 152472

The contention that GSM market, at best, will be flat has no substance. GSM is dominant in India and China - population: over 2 billion. The 3G networks will be expensive to build and 3G phones will have stuff like video streaming - the vast majority of the new middle class in these two countries will need GSM phones, only the most affluent people can initially afford W-CDMA subscriptions. Every independent projection I have seen shows very strong global GSM subscription growth for the next ten years. And these projections expected CDMA to emerge as a major rival in China, which apparently is not happening. The only economically viable area of Africa, the southern tip of the continent, is forming a GSM block of ten countries or so. Israel and the countries clustered around it in Middle East are GSM. Taiwan, Hong Kong, Singapore and China form the most vibrant economic cluster in Asia - and they are a GSM stronghold. The market penetration of GSM in major EU countries like Germany and France is still below 15% - even the most timid projections now agree that it will reach at least 60% during the next 5-7 years. No industry analyst worth his salt seriously questions that the number of GSM subscribers will grow from 110 million this December to at least 600 million. Invest in CDMA if you will - but do not make that choice on totally false assumptions. The contention that Nokia is fairly valued is equally absurd. Nobody expected the kind of market share gains Nokia is currently racking up. Wall Street consensus estimate for Nokia's annual growth during the next five years is below 25% - surreal. Motorola is collapsing in China, Ericsson is under attack in USA, smaller competitors that were expected to gain share are wilting. The conventional wisdom projected market share losses and shrinking profit margins for Nokia - the exact opposite is taking place. Size matters a lot in this business, low production volumes and weakness in China and USA are major reasons why Lucent, Phillips and Alcatel are in so much handset trouble. The recent economic trouble of nearly all small-volume handset makers is a warning sign for Qualcomm. They were all tripped up by their parochial nature: Qualcomm faces the same danger of being over-reliant on a relatively constricted home market. And the decision to follow in the footsteps of Alcatel and Phillips in launching a bulky touch-screen smartphone sounds scarily familiar. The combination of low global market share, weak brand and grandiose schemes is poison. What's the big idea of preannouncing a phone by eight months anyway? These "first half of 1999" announcements almost always mean May or June. Much more important for Qualcomm would be large volume shipments of the new Q-phone. Which was supposed to be out in late summer. It's October next week. The older models are starting to look seriously dated. And that's another draw-back of small size: when you fall back in product introduction race things may look fine for some time (as they did for Ericsson six months ago)... and then one day the sales simply die. Tero