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

To: Dave who wrote (17770)	11/4/1998 5:41:00 PM
From: sag	Read Replies (1) \| Respond to of 152472

Dave, how about KO (Coca-Cola Co) for starters! Continually probably not but certainly recently!

To: Dave who wrote (17770)	11/4/1998 6:23:00 PM
From: engineer	Read Replies (1) \| Respond to of 152472

<<<<Furthermore, prove to me a company with flat revenues that has continually lowered costs to increase their profitablity.>>>> QCOM is not flat....$2B versus $3.4B...not quite flat. Intel is not flat... As for intel.. 4M pENTIUMS AT ASP $575 WITH A COST OF $325 (65% margin) ($1.0B) OR 20M cpus at ASP of $275 with a cost of $180 (51% margin) ($1.9B) which one gets better revenue? ASP fell to half, production costs went down due to larger and more modern fabs. Cost Intel like $4B a year to build, but then this was factored into the cost of $180, since margins afterall are AFTER operating costs (total revenue in this simple made up example is like $5.5B). What you fogot in your analysis for Intel was that the market for PCs in the US grew from less than 5M in 1994 to more than 30M in 1998. And how many of those do they now have with Intel inside? What expanded the market (other than the internet).....the cost of equipment. Dropping the price by half got us to $1000 PCs. AMD did push them alot and this was a good thing, but Intel still has made alot from this either way. If they had still kept the cpu price at $575. then PCs would now cost you more like $4500 rather than the price wars you see today at $1200-1500. the only problem that QC has in this type of market is the limited production size. They need to expand to keep the volumes going higher on lower ASPs. But the components are getting chepaer because the INDUSTRY is driving them there as well. More power amps, more filters, etc are out there at a better price and quality now, so everyone is driving the costs down in CDMA. CDMA market has gone from 1M in 1995 to over 20M in 98.....where is the cost curve going? Also the Intel guys got into alot faster, better chips wiht more features which helped keep the ASPs higher. Qualcomm is going that route as well. Notice the path of the MSM chipset..lower power, higher integration, smaller pacakge sizes, etc.... Notice the phones.....more features, more abilites, more frequency bands, etc. Segmentation to serve the market better...

To: Dave who wrote (17770)	11/5/1998 9:32:00 AM
From: J.B.C.	Respond to of 152472

>> I remember the learning curve quite well. Remember, I said constantly. << A learning curve is constant, agreed it does diminish. >>The learning curve is really part of the law of diminishing returns.<< Not true, The law of diminishing returns has to do with labor inputs vs. unit outputs (And I didn't have to look this up to remember from my graduate economics courses). A entity in the business of producing widgets hires one employee, that employee is able produce 10 widgets. The second employee, is able to add 15 units to the business due to division of labor benefits, etc. This goes on to where each added person produces more for the Co. than the last person until the next person added actually adds less units than the previous person because of other constraints. Thats the Law of Diminishing Returns. >>Furthermore, prove to me a company with flat revenues that has continually lowered costs to increase their profitablity. << Easy, aircraft manufacturers do it all the time. I used to work at General Dynamics in San Diego, they produced the fusalage section for the DC-10 aircraft. As the airplane was being phased out we actually produce less body sections each year but our profits increased because it cost us less to produce each section. >>Don't you see that the number of hours saved is decreasing?<< I know it decreases, but it still costs less to produce than the previous unit. Jim