Specifically, the company suffers from a bloated inventory of older model phones, which is slowing the transition to newer, higher-margin products.
More Quotes from Michael Ching:
Chipset sales declined 26 percent to 269 million, and operating margins dropped to 24 percent from 39 percent. Qualcomm shipped only 11 million chipsets in the quarter, down from 15 million in the preceding quarter and 13.5 million a year ago. This disappointing performance partially reflected continued weak demand in Korea.Michael Ching
With a new management team in place, the review process will likely lead to more conservative revenue growth, and therefore (earnings) performance, in the near term.
Michael Ching
The magnitude of this adjustment ... is cause for concern. It is unclear how quickly Lucent will be able to implement, and track, a more conservative set of policies.
Michael Ching
Our concern on Qualcomm relates to the outlook for the handset and CDMA business. As we have indicated previously, we remain concerned that the company may take down forecasts for future earnings because we think the company's CDMA forecasts are too aggressive.
Michael Ching
With the restructuring essentially finished, we expect investors to now focus on 3Com's emerging technologies and its bottom line. We continue to look for the company to report a breakeven fourth quarter, although earnings per share could turn positive in the second quarter due to non-operating gains.
Michael Ching
We continue to believe that aggregate service provider spending in the U. S. will actually grow about 10 percent in 2001, and that our companies will report an average revenue increase of 25 percent next year. Despite this, the average price-earnings multiple of our group is now approaching levels last seen in 1997-98.
Michael Ching
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