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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: DaveMG who wrote (1768)	4/15/1999 9:09:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

Dave - it seems that Qualcomm got about 100 million dollars for the network division that had produced hundreds of millions of losses. That's what should alarm investors looking at Qcom - this company has a tendency to not to focus on its strengths and then later make corrections to patch up things. The handset division is another potential quagmire. I just don't see the rationale of running a division that is constantly capacity-constrained and faces a 2,2% global market share that is shrinking. You can't run a handset division as a niche business if you're not able to compete in the high-end market. Don't brush off this Q-phone issue. This was the high-end product that was supposed to turn Qualcomm into a credible competitor to Motorola and Nokia. Having the flagship model flop within four months of its launch is exactly what happened when the Q-phone was launched the first time - and now it has happened to the relaunch as well. If this is not a management issue, what is? Why are they producing flops if they know what they are doing? US operators have been forced to push Qualcomm's cheaper models in the absence of competition - that is ending this summer. PdQ smartphone is expected to retail around 800 dollars. What is this strategy based on? Qualcomm can't sell 200 dollar handsets, but we are supposed to believe that they can sell 800 dollar phones? The weight/stand-by time ratio of PdQ is the worst of any handset launched during 1999 in any standard or country. Don't tell me that it doesn't matter - this performance problem destroyed Q-phone. Nokia's 9000 smartphone had a similar low stand-by time when it was launched in 1996. That was the biggest single turn-off for customers. In 1996 some were still ready to grudgingly accept this - but I doubt people are as accommodating three years later. You see - smartphones are real power hogs. That theoretical maximum stand-by time is in practice reduced to 1/3 or 1/4 even with moderate use of the data functions. Look at PdQ's theorethical stand-by time and divide it by three and you'll see the real world performance of the model. Palm Pilot's success was based on three factors - it was small, cheap and had a phenomenal stand-by time. Qualcomm cheerfully broke all three rules in creating the handset version. Hand to your heart - do you genuinely believe Qualcomm execs when they say that they are not losing market share? Are the market research firms that see this market share erosion really that inept? Now that the chipset business has lost four biggest brands in CDMA phone market to competition Qualcomm is becoming increasingly exposed to handset division. Nokia is delivering the 6185 to operators this month. Motorola is already selling every Startac it makes. I think you know what the most likely scenario is - after conquering the high-end market Motorola and Nokia start attacking the mid-market with their cheaper models already in the pipeline. I know exactly what happens when anyone raises the handset issue at Qcom thread. About a dozen people immediately claim that actual sales growth of Qualcomm does not matter - there are billions to be made by licensing fees in 2003. Well - we'll see after 2Q and 3Q numbers just how calmly Wall Street will take profit margin erosion and market share losses in a company with a P/E of 60. Tero