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

To: 2brasil who wrote (15463)	9/24/1998 3:26:00 PM
From: 2brasil	Respond to of 152472

quote.yahoo.com

To: 2brasil who wrote (15463)	9/24/1998 3:30:00 PM
From: Gregg Powers	Read Replies (2) \| Respond to of 152472

Bruce: Never apologize for ignorance...the truly wise know when to ask questions! As you are likely aware, QC had invested in an number of wireless ventures including Chilesat (Chile), Chasetel (USA), Metro_unpronouncable (Russia) and Pegaso (Mexico). The purpose of these investments was to (a) jumpstart the company's infrastructure effort, (b) promote the spread of CDMA and (c) ensure participation in attractive follow-on opportunities (handsets etc.). However, subsequent to various conditions, Qualcomm could not recognize revenue or profit from some or all or its sales to these entities. In addition, start-up wireless companies typically operate at a loss for several years, since the operator must buy a cellular license, build-out the network infrastructure and market its service well in advance of having any revenue generating customers. Prior to spin-off, QC would have had to recognize a portion of these start-up losses on its P&L and this likely would have unnecessarily complicated the company's earnings reports. Let me give you an example of how convoluted this can get. Prior to its acquisition by Alltel, we owned 360 Communications (a large, Chicago-based wireless operator). Believe it or not, Wall Street was disenchanted with 360 because it was TOO profitable. Several analysts argued that the company was not marketing its services aggressively enough and therefore was trading its long-term potential for short-term earnings...so the analysts would have been much happier if 360 had spent MORE money and operated at a loss. Whether this perspective was correct or not, the point is that the wireless OPERATOR model is very different from the wireless EQUIPMENT VENDOR model and QC shareholders should benefit at least perceptually from the separation. As for the economics, QC will now be able to recognize the full revenue and profit on its equipment sales to LEAP ventures AND the equity losses from these ventures will be removed from QC's P&L AND we shareholders get an interesting investment in emerging cellular markets. Hope this helps! Gregg