Replies to post #4413 on Qualcomm Inc (QCOM)

[ihavenoidea]

Jim:

Good stab. Two minor points: don't forget approx. 10% decrement due to reduction in hand set costs. (maybe you included it and i missed it). And Caveat: before SARS, Unicom said they were aggresively testing GSM1X and should be finnish by, I think June or July. Now that they said they are resuming testing, why is it taking to the end of the year?
Any concern?

Mike

[sbono13]

thanks jim, for sharing your thoughts. i agree that the analysts seem to have unrealistically low expectations for QCOM 2004. As a QCOM shareholder, I would be very disappointed to see no growth in 2004.

I concur with your analysis that shows that growth in CDMA handset sales is going to have to come from three main sources: China, India, and wCDMA. You also mentioned GSM, via the the MSM6300, but I have a feeling that you are being overly optimistic here (perhaps by a factor of 10)... i think you might be double counting some sales (anyone from CHU or VZ that buys a 6300-based phone would have bought a normal CDMA phone anyway).

China and India will definitely increase in unit sales, but with low ASPs. Using your estimate of an increase of 13M units, at around $100/unit, I'd guess that the contribution will be ~10 cents to eps. wCDMA is really the key here. If they can sell 10 million wCDMA phones (@ $400/ea), that could add another 25 cents (minimum) to the bottom line.

So if everything else stays flat in unit sales, and assuming ~10% drop in ASPs, we should be looking at 90%*$1.40 + 35 cents = $1.61/sh.

Note that without meaningful contribution from wCDMA, eps would probably remain flat, IMO. The analysts' estimates must reflect this skepticism.