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Stock of San Diego telecom superstar Qualcomm is down 8.98% in after-hours trading this afternoon (Jan. 27). After today's market close, the company lowered its estimates for the year. Earlier, it had expected sales of $10.5 billion to $11.3 billion for the fiscal year that ends in September. Now it expects $10.4 billion to $11 billion. It still expects earnings per share to be between $1.56 per share and $1.75 per share. For the current quarter, Qualcomm forecasts earnings of 49 cents to 53 cents a share on sales of $2.4 billion to $2.6 billion. Wall Street analysts were expecting earnings of 57 cents a share on sales of $2.75 billion.

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Comments

JustWondering Jan. 27, 2010 @ 3:13 p.m.

Just wondering if the news that Apple's new "IPAD" will using its own home grown chip and not one of Qualcomms' or Intels' will result in more negatives for the stocks?

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Don Bauder Jan. 27, 2010 @ 4:35 p.m.

Response to post #1: There is a lot of stuff on the web today on which tech companies will be helped and hurt by iPad. Go to www.marketwatch.com. Best, Don Bauder

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Burwell Jan. 27, 2010 @ 7:50 p.m.

The FCC should regulate wireless and force US wireless providers to use the Qualcomm CDMA standard and allow no other. Since the feds financed the development of CDMA technology, I believe the feds have the legal ability to allow US wireless providers to use this technology for free, without paying royalties to Qualcomm or the foreign patent holders who siphon hundreds of billions from the US economy. Federalizing CDMA would result in a substantial reduction in cell phone rates.

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Don Bauder Jan. 27, 2010 @ 7:53 p.m.

Response to post #3: Forcing the use of a technology subsidized by the U.S. government would set an extremely dangerous precedent. Best, Don Bauder

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Don Bauder Jan. 28, 2010 @ 9:05 a.m.

NOTE: At 9 a.m. West Coast time today (Jan. 28), Qualcomm stock is down 13.4% to $40.86. The Dow Jones Industrial Average is off more than 1.4% and NASDAQ (greatly tech stocks) is off more than 2%. Best, Don Bauder

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MURPHYJUNK Jan. 28, 2010 @ 9:45 a.m.

the telecom charge what the market will stand, in 3rd world countries lots of phones, no plans, and very low cost per minute. same systems, but the people are not being bled ( or bled for what they can pay in relation to their income)

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Don Bauder Jan. 28, 2010 @ 11:01 a.m.

Response to post #6: Third World countries are ahead in cell service. Best, Don Bauder

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Ponzi Jan. 28, 2010 @ 5:49 p.m.

I agree about the third world being ahead. The cell phone permitted dozens of third world nations to “leap frog” the old land-line based communications infrastructure. Billons of dollar have been reserved from not having to run millions of miles of copper through all kinds of terrain.

They will probably never run copper lines. Perhaps some fiberoptics in populated areas for high speed broadband and voice.

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Don Bauder Jan. 28, 2010 @ 8:55 p.m.

Response to poste #8: I don't know the need for running copper wire now, at least for phone service. Best, Don Bauder

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johnsd Jan. 30, 2010 @ 1:14 a.m.

"Third World countries are ahead in cell service."

Could you please be specific as to which countries are better and in what sense.

Japan has certainly been a trail blazer in wireless, but NTT is not really ahead on LTE (4G) and their technology is unique to Japan. Europe developed the GSM standard and the single technology platform allowed the rapid deployment of cellular service, particularly of 2G. The relative high cost of landlines in Europe also facilitated the adoption of wireless service.

The US market developed differently than most of the world. It started out as a duopoly in the mid-1980s. Since then, the FCC has auctioned the frequencies for several billion dollars. The US is one of the few places where you do not pay a termination charge when you call a wireless phone. That is why you pay more when calling a wireless phone in Mexico or another foreign country, even on Skype. Sprint and Verizon chose Qualcom's CDMA technology and AT&T and T-Mobile chose GSM. The 3G evolution of GSM is actually a variation of CDMA.

What probably creates the greatest frustration is the 2-year contract that most of us have. However, we love the heavily subsidized phones that are part of the 2-year contracts. I paid $199 for my iPhone, but paid CA sales tax on $599, which implies a $400 subsidy that AT&T recovers over the 2-year contract. According to AT&T's earnings call, it has more wireless data volume than any other carrier in the world. If this is accurate, it is because of the widespread use of the iPhone and other 3G phones. Our monthly plans tend to be more expensive than in other countries, but according to the wireless industry association, the per-minute cost is lower than in most countries, particularly if you have a family plan. The charges for SMS is a rip off.

The cell phone is only wireless between the handset and the nearest cell tower. The rest of the network is terrestrial and not very different from the traditional telephone network. The frequency spectrum available between the phone and the cell tower and the connection between the cell tower the rest of the network are the limiting factors for the data rate. Most cell sites today are connected by copper and have a few DS1s (1.5 Mb/s) of backhaul capacity. Fiber connections are needed to provide the backhaul capacity required by 3G/4G data-centric phones. Deploying all of this fiber is expensive and time consuming, particularly in areas that are not very densely populated. In very urban areas, such as SF and NYC, cell antennas are sometimes deployed in every block to minimize congestion.

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johnsd Jan. 30, 2010 @ 1:22 a.m.

"I don't know the need for running copper wire now, at least for phone service."

The phone companies want to eliminate the copper wire for basic voice service because of the cost. I will keep my traditional phone service as long as I can get it. 911 response is much faster and, as happened with a relative last year, it can be the difference between life and death. I also want the phone company to provide power to my phone so that I have phone service during a power outage. A cell phone will work until the battery back-up at the cell site runs out. The telephone central office has batteries and a generator for back-up during power outages.

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Don Bauder Jan. 30, 2010 @ 7:13 a.m.

Response to post #10: I keep reading that some third world countries (such as parts of Mexico) have better cell phone service than New York City. If this is wrong, let me know. Best, Don Bauder

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Don Bauder Jan. 30, 2010 @ 7:14 a.m.

Response to post #11: A lot of people share your opinion. Best, Don Bauder

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johnsd Jan. 31, 2010 @ 11:17 a.m.

I do not have specific data regarding wireless phone service in either NYC or Mexico. I have not been to NYC since 9/11 and I rarely go to Mexico. I do know that Manhattan presents special challenges that can make wireless communications there more difficult. All of the high-rises create urban canyons with many reflections and path interference that can affect signal strength. The subway and the many underground spaces in Manhattan further complicate the availability of wireless signals.

In the US, the frequencies used are 850 MHz, 1800 MHz, and 1900 MHz. Many overseas markets also use the 900 MHz frequency band. In the near future, the 700 MHz frequency band will be used by AT&T, Verizon and other carriers that paid over $11 billion to the federal government for about 50 MHz worth of bandwidth a couple of years ago. The lower the frequency, the better the propagation characteristics and the ability of the radio signals to penetrate walls and other obstacles. I do not believe that most carriers have a total of 100 MHz of spectrum across all the frequency bands. The new FCC chairman recently said that more spectrum needs to be made available for wireless communications. Advances in technology, many of which are being made by Qualcom, improve the number of bits that can be transmitted per available MHz.

An additional factor that can affect wireless service in Manhattan is the population density. It is fairly easy, though not inexpensive, to have high-capacity terrestrial backhaul from the antenna in an urban area. However, the volume of voice calls, and particularly data transmission with computer-like phones such as the iPhone, may exceed the limited amount of available spectrum. There have been reports of O2, the original iPhone carrier in the UK, having congestion problems in London. I know that in San Francisco, which does not have the same population density as Manhattan, some carriers have more than one antenna in a city block. Each antenna requires working with a property owner or the city and then the connection to the rest of the network. The original analog cellular networks had antennas every 5-10 miles.

The iPhone and other internet centric phones have significantly increased the bandwidth demands on cellular networks beyond what was originally thought and have strained the networks. Cellular service in the US can definitely be improved and some other places may indeed be better. But people often complain based on perceptions or expectations and the data, or a better understanding of the circumstances, may be quite different. On balance, cellular service in this country is as good as anywhere else. It is better in some aspects and may not be as good, or the way someone may want it, in other aspects.

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Don Bauder Feb. 1, 2010 @ 6:21 a.m.

Response to post #14: This density factor, which you explain very well, may be one reason why cell phone reception is better in parts of some third world countries. Best, Don Bauder

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a2zresource Feb. 1, 2010 @ 4:07 p.m.

Looking forward to your analysis of Sempra Energy on word that JP Morgan has pulled out as the last bidder for Royal Bank of Scotland's stake in RBS Sempra Commodities...

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Don Bauder Feb. 1, 2010 @ 8:17 p.m.

Response to post #16: You are informing me of that. I thought Sempra intended to sell its stake, too. I will check it out and get back. Best, Don Bauder

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Don Bauder Feb. 1, 2010 @ 8:36 p.m.

NOTE: RBS Sempra: The outfit is a commodities trading operation (dare I say a la Enron) in which San Diego's Sempra and deeply-troubled Royal Bank of Scotland (84% owned by the U.K. government) have a joint venture. The European Union ordered the bank to sell its stake. JPMorganChase was going to buy the whole operation. However, President Obama's desire to have banks drop proprietary trading has scared off JP. Now JP may buy the non-U.S. operation of the joint venture, as I understand it. Royal Bank of Scotland would sell its stake in the U.S. part of the joint venture back to Sempra. Sempra has reported fat profits from this trading operation, but I have always been wary of it, figuring it was more phantom money than real economic activity. At this point it's all speculation whether Sempra will end up owning part of it. Best, Don Bauder

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