Qualcomm Inc (QCOM)

[Eric]

The Semicobductor Industry: "On-Time" Sampling

Jim,

<< However, when pushing new state of the art technology the pins are not always going to fall exactly as planned. >>

You and I are most certainly in agreement with that statement.

If companies don't set aggressive dates for product deliveries - sampling dates in the case of ICs - don't push the technology envelope, they aren't going to survive in a competetive arena.

<< I don’t view missing some of these dates by a few months terribly disturbing (as some do). >>

Whatever individual you are talking about in that sentence is probably not complaining about missing dates for product delivery.

He's probably like me.

He's probably talking about a semiconductor manufacturer he holds a position in missing a sampling date by 2, 3, or 4 months and being told that the product was really not late ... that it was "on-time."

I have been vocally critical, of the management of a company that I am a shareholder of for missing a date - by 4 months in the case of the MSM5100 and by 4 months in the case of the MSM6300, less in other cases - and when they missed it, instead of simply moving on, celebrating yet another "on-time" sampling.

I assume you understand what I am critical of, and what I'm guessing whoever you are refering to, was probably also critical of?

It wasn't missing a date or dates.

There are any number of valid reasons a sampling date can slip. Been there, done that. Been there, done that, again.

It was telling us as a shareholders, telling analysts that track the company whose stock that we hold, that the product they missed the date with, was "on-time."

So that there is absolutely no misunderstanding, let me tell you precisely how I stated that when the MSM6300 sampled 4 months late and its late sampling was immortalized in a press release celebrating its "on-time" sampling, and 'Doug' Schrock stood in front of analysts with his slide celebrating the fact that for 5 consecutive years every single MSM had sampled on time, and to my embarrassment the giggles from the analysts in attendance were audible:

"Qualcomm is sometimes simply Incredible and as a shareholder I'm Incredulous.

While I am fully aware of why leading edge new products can ship late I abhor being told they shipped on-time when they ship late according to previously published statements by a corporation.

I accept the Safe Harbor "forward-looking statements" clausee for what it is intended to mean, but it does not provide sanctuary or an excuse for calling something that is late, "on-time", IMO.

We are, however, not talking here about products placed on roadmaps which are always susceptible to change and which we need to recognize. We are talking here about products that had anticipated sampling dates provided in Press Releases, Earnings Releases, and an Annual Report. ...

... We went through this last year with the 4 months late but none the less "on-time" MSM5100.

As it relates to the use of the word "on-time" by QUALCOMM I am once again reminded of the ad PriceWaterhouseCooper that ran through the Ryder Cup. It used a golf metaphor to address the issue of integrity in reporting and corporate governance. In the ad a golfer named 'Doug' was prone to making pocket drops from the tall weeds, adept at foot mashies, and had a poor memory when reporting his strokes to other members of his foursome. After seeing the ad, and having listened to Don give an otherwise fine performance at Banc of America Securities conference, it is difficult for me not to refer to Don Schrock as 'Doug' Schrock."

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=18116266

Arun Sarin of Vodafone, certainly understands that things don't always happen quite as quickly as we would sometimes like. He's been there before. More than once. In an article called "Red Planet" in the February 2004 issue of "Mobile Communications International," James Tulloch quoted him on the subject of [MSM6300 based] dual mode handsets.

"I would say transatlantic roaming is quite important. We just haven't figured out in a cost effective way how to transcend the boundaries of technology here." That will come, Sarin says, with the introduction of dual mode GSM-CDMA handsets in "six to nine months". Vodafone has considered and discarded, for the time being, an infrastructure-based solution. "Our technical people looked at a lot of different ideas, whether GSM1x or dual mode handsets, and...when we look at the cost and benefit analysis the answer that comes back is to go back to the dual chip idea." On the other hand, Sarin admits there has been considerable slippage: "We said it [would] be available two years ago, a year ago, six months ago and now I am saying it is six months out."

It would probably not be a good idea for any one from Qualcomm, Samsung, Motorola, Denny Strigl's staff or whomever, to tell Arun Sarin that those late handsets, were delivered in usable and salable fashion to Vodafone or Verizon - "on-time." Not a good idea at all.

Best,

- Eric -