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

To: Gregg Powers who wrote (18428)	11/18/1998 2:13:00 AM
From: tero kuittinen	Read Replies (5) \| Respond to of 152472

OK, we agree to disagree. Let's continue this discussion sometime next year when more is known about 3G and the handset situation. The royalty and chip income make Qualcomm interesting, no arguments there. But what is easy to ignore at this stage of CDMA expansion is just how perilous the handset business is for small volume manufacturers. Philips handset division is losing 500 million dollars this year. Their leading model weighs around 100 grams, has voice activated dialing and solid standby time. This company makes better phones than Qualcomm and has a strong brand to boost their sales. Still, the phone losses are in the process of wiping out the profits of the entire Philips consumer goods sector. The story is essentially the same for several other companies entering the handset biz after 1995. CDMA market will face the same competitive pressures as the current GSM market in the future. You can argue that Qualcomm will become the first company to buck the odds. But that is a matter of faith. There is nothing in Qualcomm's product development in 1998 that points to that. On the contrary... the fact that Motorola's Startac zooms way ahead in CDMA phone specs after 1 year delay in product introduction tells us of the sluggish pace of Qualcomm. pDQ is a neat idea but nobody knows when smartphones will start making money. We see once again the addiction to glamour and risktaking overshadowing basic business planning. Instead of trying to catch up with the market leaders in making basic, high volume phone models Qualcomm goes off in a tangent and starts making smartphones. Wouldn't fixing the energy consumption and weight problems be the first priority? I don't buy this "Wall Street is too dumb to live" angle. Qualcomm is engaging in behaviour that is highly risky for a company its size. That is the what is dragging down its stock price. Dave is arguing that Qualcomm has a better shot at growing wildly its bigger rivals. True. But there is also a huge risk involved in the strategy of spreading out the company resources to fight four different wars simultaneously. This company is being sold as a surefire success story. It looks a lot more like a speculative buy. When the future of the business depends on a single decision in the 3G and the against the odds success of the phone division you can see why the licensing and chip successes can easily be swamped in the next two years. Tero