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

To: Jon Koplik who wrote (18487)	11/18/1998 10:06:00 AM
From: Ruffian	Respond to of 152472

Hutchison TO Quit In China> Hutchison threat to quit market South China Morning Post Hutchison Whampoa has warned it may quit the fixed-line telephone business if the Government decides to open the local market to more competition and does not restrict the number of players allowed licences to own international call infrastructure. The company has poured more than $2 billion into building its local network around Hong Kong. However, Hutchison Telecom (Hong Kong) managing director Dennis Lui said there was a possibility shareholders would decide to write off the operations and sell the assets if a new business environment meant the investment just was not worth it. "Sometimes it is better to cut off your arm, cut the loss, than go forward and get killed," Mr Lui said. It is Hutchison's toughest warning yet about its future in the fixed-line business in the light of the regulatory changes proposed by the Government. It adds to the pressure from the new local players who are looking for some sort of deal that allows them to keep the market restricted to the four existing operators. Mr Lui said Hutchison had submitted a proposal to the Government that would involve a "new performance bond". This would amount to a corporate guarantee that could allow the Government to take legal action against the company if it failed to fulfil its new promises. "More or less everyone has submitted something along these lines," Mr Lui said. At the time of the issue of their original licences in 1995, the companies were required to surpass a performance bond dictating the sizes of their networks by certain pre-agreed dates. Hutchison has surpassed this many times over, fixed network director Peter Wong said. On January 1, competition begins in the international market through a process known as international simple resale (ISR). This allows operators to lease capacity from Hongkong Telecom and resell to consumers. The Government has already said ISR licences will be issued to anyone on demand. However, it has not decided whether licences to operate international undersea cables and international gateway landing facilities will also be opened up in the same way. Mr Wong said Hutchison saw this so-called international facilities licence as an integral part of the local business. This licence has value and would allow the company to "negotiate with overseas players on a more equal bilateral basis", Mr Wong said. If the gateway market was totally opened, the local players would be sidelined as big international operators came in and dominated the market. They would get a free ride, while Hutchison and new rivals would have had to pay out millions on building a local network, Mr Wong said. Mr Lui said Hutchison was not against eventual competition but at a slower pace. It had proposed a moratorium on new local competition and gateway licences until 2003. "It would give a few years for the local companies to survive and pose a serious challenge to Hongkong Telecom," the managing director said. Supporting its view that Hong Kong is opening too quickly, Mr Wong pointed to the experience in other countries. The length of time between first liberalisation of the local market and subsequent freeing of the international market is more than six years in Australia, Canada, Britain and the United States. In Hong Kong, under the Government's proposal, opening the global market will occur in 3.5 years. (Copyright 1998) _____via IntellX_____ Publication Date: November 18, 1998 Powered by NewsReal's IndustryWatch ...back to top

To: Jon Koplik who wrote (18487)	11/18/1998 11:16:00 AM
From: Gregg Powers	Read Replies (5) \| Respond to of 152472

To all: Many of you know that I have been participating in this debate since 1996, first on the Frezza Forum, and when that tent folded, over here on SI. Recently I reread my archives from the Frezza days, noting with amusement the amazing comments and predictions made by Frezza, Tero and others. If they had been correct, Qualcomm would have been a smoking ruin by now and Airtouch, BellAtlantic, Sprint and PrimeCo would be in negotiations with their respective creditor committees. Pretty vitriolic stuff. Without sounding like I've been watching too many X-files episodes, I was taken aback by the homogeneity of Qualcomm's critics, ranging from the lay circles, i.e. Tero, to Wall Street, i.e. Marc Cabi. From the Frezza days forward, people seem to be reading from a script. First they argued that CDMA would not work. Then they argued that it would not work well enough. Then they argued that it would be too late to market. Then they argued that it didn't live up to all its promises. Objective refutation was consistently ignored as were tough questions about the inaccuracy of Ericsson's predictions. Undaunted the pundits then argued that Qualcomm couldn't manufacture products well enough. Now they claim that competition will bury the company. Each time Qualcomm resolves one issue, another is proffered. A continual, relentless outpouring of fear, uncertainty and doubt. Why? I was thinking about this as it relates to Marc Cabi. His commentary reads like a financially sophisticated version of Tero's. For the longest time he argued that CDMA was going to be too late and too uncompetitive...so avoid Qualcomm. He then spent the last eighteen months questioning the manufacturing model...so avoid Qualcomm. His estimates were the lowest on the Street and the company consistently beat his numbers..only to face some arcane rationalization as to why the reported earnings were not as good as they appeared...so avoid Qualcomm. Now as QC's operating margins have gapped higher, Cabi has positioned himself as the HIGH estimate on the Street...arguing that QC is not a good investment BECAUSE earnings growth is being driven by expanding margins (even though he previously predicted that said margins would not expand)...so avoid Qualcomm. Unbelievably...he recently has made Tero's argument that Qualcomm is threatened by an onslaught of handset competition...even though he MUST be aware of the offsetting dynamics of royalties and ASIC sales. When I read his stuff I can almost hear Rod Serling's voice in the background, "you have entered the Twilight zone where to inaccurate hyperbole we are prone." The icing on the cake was Cabi's response to the Microsoft-Qualcomm joint venture. Prior to its formal announcement, Cabi positioned WirelessKnowledge as some kind of desperate competitive response to Symbian. His argument that current marketshare will drive the ventures' relative success is one of the most inane viewpoints that I have read in recent times. Since we are talking about a wireless data market that has not even developed yet, it seems a more than a little premature to predict a victor based on current "marketshare". Beyond his perfunctory dismissal of Microsoft's marketing clout and competitive power, he simply chose to ignore that partners such as Sprint and AT&T had obviously conducted extensive due diligence before signing on and that their actions explicitly validate the technology pathway. Still, when partnered with Qualcomm, even Microsoft is a weak sister in Cabi's eyes. Another irony, Irwin Jacobs and Steve Baumer directly refuted Cabi's claim that WirelessKnowledge was a last minute construct when they stated that MSFT/QC had been in discussions for over a year. Another biased inaccuracy disproven to no avail. What does this all mean? Well, it's a free country and Marc Cabi is certainly entitled to his opinion...after all, it is his professional integrity and credibility on the line. Still, I am left to wonder why all the Qualcomm detractors seem to read from the same script? Why do some of them formerly work for Ericsson, while others resolutely maintain their "buy" rating on the same despite disappointing operating results? Why? Best regards, Gregg