高通 (QCOM) 2002 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm second quarter conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you have a question, you will need to press the 1 followed by the 4 on your push button phone. As a reminder, this conference is being recorded April 24th, 2002. The playback number for today's call is 1 800 633 8284. International callers, please dial 858 812 6440 the playback reservation number 205 58 870. I would now like to turn the conference over to Ms. Julie C. Cunningham, Senior Vice-President of Investor Relations. Julie, Please go ahead.

Thank you. And good morning joining me today Dr. Irwin Mark Jacobs Chairman and CEO, Anthony S. Thornley President and COO, William E. Keitel Chief Financial Officer, Dr. E. Paul Jacobs Group President of Qualcomm wireless and Internet, and Donald E. Schrock, Group President of Qualcomm CDMA technologies. In the Internet presentation on audio broadcast accompanies this call. And you can access it by visiting www.Qualcomm.com. In addition, an audio rebroadcast will be available on our website for approximately two weeks. Our second quarter earnings conference call was taken place on Wednesday April 24, 2002 at 5:30 AM specific time. This call continues time sense written information sense information that is accurate only as if today's date and time. In addition, we may make forward-looking statement during this conference call and may differ materially from Qualcomm actual results. Please review our most recent SEC filings for a detailed presentation of each of our business and associated risks. I will begin with the brief recap of our second quarter results as detailed in our press release issue today.

ProForma revenues were 650 million compared to 717 million in the year ago period. And 693 million last quarter ProForma earnings per share were $0.20 compared to $0.26 a year ago and $0.23 last quarter. Now we will introduce Dr. Irwin Mark Jacobs Chairman and CEO of Qualcomm.

Thank you. And good morning everyone. I am going to make a few general comments before getting into the specifics of our quarterly results. Clearly Investor concerns of our capital expenditure by wireless operators have spread across the Telecom industry. And if let some still include 3G is either too expensive or perhaps unnecessary. We could not disagree more capital expenditure for transitions to 3G are considerably less for currency CDMA operators using their existing spectrum then for non-CDMA operators with Greenfield deployments. This is one motivation for our introduction of GSM 1X, which I will discuss later. Qualcomm business model benefits strongly by the rapid expansion and consumer-spending fort the new 3G CDMA phones. We are seeing growth in 3G phone sales because of attractive services that is the data speed may be possible by CDMA 2000 1X, and 1xEV-DO color-screen phones position occasion and BREW applications that makes 3G attractive and indeed compelling. As consumer adopts 3G, we believe wireless operators were realized increased revenues from data services. We have seen strong evidence of this KT Freetel in South Korea and we believe the same of whole true CDMA operators around the world ____00:47:58. As consumers began to in cooperate readily access wireless stated into their everyday lives. Operator revenues are expected to grow.

This growth can help us toward the telecom industry and return at the financial strength. Our core business achieve solid performance this quarter in spite the second quarter seasonality that we discussed in our January and February conference call. Our chip business realize the high end of its target to chip 13-14 million MSM phone chips and exceeded the original goal to chip 7 million CDMA 2000 1X chips by 1 million units. Significantly, this is the first quarter were over half of our chip shipments are 3G chips. The transition of 3G is also possibly impacting our QCT operating margins. As a product mixed chips that have a higher functionality chipset, which carry higher average selling prices. As expected our technology rising segments revenues were lower than the year ago. And the first quarter due to lower overall phone shipments and a geographic chip toward the United States were phone prices are lower. However, the average selling price of phone cell study within the each region. Technology licensing is another business that we expect little benefit from the transition to 3G CDMA as higher volumes of phones are sold and a green range of model become available. Many with color screens multimedia and position ____00:49:31 capabilities. We made good striates with the adoptions and commercial of BREW over the past quarter and with excellent progress at KT Freetel in South Korea arise and here in the United States and soon at KDDI in Japan. I will provide more specific on this later in the call. From the technology prospective we are working with the operators of manufactures around the world to increase the adoption of CDMA. We support all of 3G, CDMA developments with standard efforts, chip development, and operator and manufacture assistance.

Including a core CDMA 2000 and WCDMA. We are shipping small numbers of WCDMA test phones to operators and infrastructure manufactures to assist them in their introduction of WCDMA. John will discuss our recent progress on our Zero-IF and multimode chip designs. But I would like to stand a few 2minutes bringing you up to speed on our technology initiatives. With the world cup beginning next month in Korea and Japan. We have a great opportunity to showcase our 1X and 1xEV-DO technology to global audience. SKT] in South Korea has turned on initial commercial services and ____00:50:52 sold we plans to extend to 81 cities by yearend. KT Freetel has extensive plans with demonstrating the capabilities of high debt rate for applications including video on demand with ____00:51:04 extend method service multimedia mail and they are magic multi fact using BREW. Brazil has announced 1xEV-DO trails is Santiago with Nortel, and Washington BC with Lucent. These trials will began in the spring and summer respectively. We demonstrated our convergent solutions for GSM 1X a cost effective technology of Lucent to third generation for GSM careers. One that can be use in existing spectrum with existing ____00:51:37 as well as a new spectrum. Similar to WCDMA, GSM 1X enable the convergents of GSM, GPRS core service network with a 3G CDMA year interspace along careers they save money by utilizing their drifting GSM, GPRS core network equipment. GSM, 1X enhances data capabilities and spectral efficiency with the use of commercially available CDMA 2000 1X infrastructure equipment and existing single mode handsets as well as soon to be available dual-mode handsets and devices both utilizing [UIM] or GSM, SIM cards. Although when we introduce in February we are generating a lot of interest in GSM 1x. There are several GSM operators in Asia ____ 00:52:24 megawatt spectrum that do not have 2.1 gigahertz are so called 3G spectrum. GSM 1X often see operator's ability to provide 3G services on existing spectrum with proving technology and significantly improved economics. We will continue to drive our product and technology in Asia help to grow the worldwide CDMA market. We realize our business goals and chief the top and bottom line financial ProForma our shareholder deserve. I will now turn the call over to Anthony S. Thornley will provide an overview of our global business development.

Thank you Irwin. First I would highlight the despite recording slightly down revenue in earnings versus Q2 last year and Q1 of fiscal 2002. We are achieving some very positive milestones and our business model continues to produce very good results in terms of earnings and operating cashflow. Milestones weak and the growing community is CDMA operators were rapidly moving to third generation systems are achieving setting the stage for even great leverage of our business model. Return on sale in our core business with 38% in Q2. This is slightly down versus recent periods because of slightly higher operating expenses on lower revenues. However, as we look forward to accelerating topline growth in the coming quarter. Modest increase in operating cost and essentially flat head count. Operating margin will improve above the 40% level. This operating margin obviously drives our cash flow. We are managing [QSI] investments very carefully and looking to realize good returns on our existing investments and continue to be very selective in the new strategic investments we make.

Next I will review the latest regional developments. I we will begin with South Korea since the handset subsidy issue was prominent in the news yesterday. This Korean Ministry band handsets subsidy nearly two years ago. Operators have used different forms of marketing incentives to stimulate sales. The Ministry of communication is recently introduced strong measure to ____ 00:54:41 Freetel so the question becomes what are the potential mark implication and how might they impact us. First I would out point the South Korea is a smaller part of our total market these days and this is a material market with 63% penetration. The economy in Korea is strengthening in the market for phone is strong. As a result of new services and applications that have been introduced today. A vast majority of handset sales and ____ 00:55:12 replacement this tend to high and 1X model many with color-screen and in near future it will be exiting you 1x EV-DO models. Secondly both the Korean manufactures and the Ministry strongly safe the export market. A highly motivated to expand CDMA 2000 1X around the world. So any reduction in the domestic Korean market will probably be upset by higher sales in another parts of the world. The upper agents in Korea have indicated April handset sales were disrupted by the subsidy action. But the expect recovery in May and June as a results off add campaigns and the world cup promotions. These have already been infracted into our guidance for the coming quarter in the year. You will now within the guidance section of our earnings release we narrowed our previous estimated range of CDMA phones sold this calendar year.

The total range was driven from 80-90 million to 80-85 million. The lower end of the range has not changed. Based on our current outlook we are confident that this range is achievable and hopefully conservative. For your benefit following this is how we breakdown the 85 million or high end of the range. North America is 42 Latin and South America 10, Asia 30, and then the rest of the world and other devices they have being phones back 3. Since December there are been several new 3G, CDMA system deployment. Currently, there are 14 3G, CDMA networks international and corporation in six countries consisting of 12 1X networks 1X/1xEV-DO network and 1 WCDMA network. Several of these networks have been launched during the March quarter so they are in the early growth stages. However, the majority of the 7 million reported 3G, CDMA subscribers are in South Korea today. However, wireless operators in Japan, U.S., Canada, and Brazil are actively adding 3G, CDMA subscribers. There are several more networks including [Sprintie] in the U.S. that are preparing to launch commercially of the next few months. ____00:57:38 comment recently that one 1X in wireless data provides the rare opportunity to differentiate its service from other operators. It is really a very exciting time for us in CDMA operators around the world. In Asia and Japan second largest operators KDDI launch CDMA 2000 1X on April 1, with coverage of about 70% of the Japanese population. KDDI is aggressively selling 1X phones and the consumer response to service has been very positive. We planned to extend the 1X service nationwide down the end of this year.

And they have stated that the goal is up 50% of the customer migrated to 1X by March 2003. As well as of course winning new customers from competing networks. KDDI has introduced camera and location based application that are proving very popular in the initial launch. We also began trails of credit card and payment system using 1X phones. This service would allow online shopping with position location services and enhance security features. The test is successful KDDI plans to introduce the service by late fall this year. Looking to China [Unicom] announced yesterday that is publically listed subsidiary China Unicom limited had approximately 568,000 subscriber on the CDMA 1 network and 12 of China's 30 provinces at the end of March. We believe that data represents only a portion of the tertiaries were CDMA has been deployed but this is part of the country owned by Unicom listed company in Hong Kong. We know the investment takes great interest in the China market and recently shared our interest. However, we think it is important to keep perspective and expectation aligned with the fact the China Intercom network has been trial operation for only one quarter. Formal commercial operation began on April 8. China intercom initial focus has been on tuning the network obtaining a variety of handsets we finding its marketing and sales activities and planning the upgrade to 1x, which roughly doubles voice capacity and existing ____00:59:53 station. We have included 3-4 million handsets to be sold in China this calendar year and our market forecast which is lower than Unicom forecast of 7 million. We believe the China intercom is highly motivated to make CDMA successful that represents a great opportunity for them and for Chinese manufacture. We expect china will begin at CDMA 2000 1x deployment it the second half of this calendar year and be a significant 3G CDMA market beginning in 2003. India is another market where we expect substantial growth in 2003. We met with Reliance reasonably and were pleased with the extent to that plan. We would expect to see contract enhancement made in the next few months with commercial service to begin before the end of the calendar year. Reliance is a very committed and powerful company in India and they are dedicated to providing outstanding service to the very reasonable cost to a much larger portion of the Indian people. That is previously enjoyed telephone service. Sending now the Latin America phone sales have been lowered than we could expect at the beginning of the year. We put major energy into this market and focussed on making a low cost phone available to career as well as insisting with the upgrade of networks to 3G to 1X with [Telas] and telephonic are in Brazil. The low cost 1X phones that we were working on as based on our MSM ____04:01:28 ship but we are already working with others to make an MSM 6000 based phone available as soon as possible to take advantage of the lower components and lower manufacturing cost new zip architecture will realize. Vesper has introduced to new service to Brazil with unlimited usage in minutes for a fixed price. Over the past quarter our focus in Vesper has been on improving system and services in addition to the introduction of this new offering. We expect somewhat lower subscribers ____ 01:02:06 for this year than previously estimated as we have focussing on bringing Vesper to an operating of cash break-even. Now I will turn the call over to Paul Jacobs who will cover from Internet group.

Thanks Tony. I begin with the technology licensing business which is reported under the [QTL] segment. We signed a total of 5 CDMA license agreements during the second quarter including two new license the re extension. We also announced that four key Qualcomm patent were applied by patent offsets in Europe, South Korea, and Japan. As Irwin mentioned QTL revenues were lower in the second quarter compared to the last quarter in the year ago period. March quarter is typically a seasonally lower quarter during that falls the post holidays selling seasons for phones. A year ago period reflected higher than normal royalties due to our record our number of phone shipments in the December 2000 quarter. It reference everyone back to our second quarter 2001 10Q for more detail description of the year ago quarter. In the second quarter fiscal 2002 average selling prices on a region-by-region basis remained relatively flat as we expected they were at the outside of this year. The geographic mix of phone sales however, ____01:03:34 shipment towards the Americas were blended [ASPs] are lower. As the 3G, CDMA transition continues we are to expect phone ASPs to decline less in certain cases improve as models with color screen and advanced capabilities become wildly available. As you know a big part of our strategy to grow the CDMA market is doing increased demand for wireless data.

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______]: As you known a big part of about strategy to grow the CD [______] market is doing increased the man for well as data. To I [______] is focused on working closely with the [______] to create useful and compiling up applications and with carriers to [______]the [______]services [______]. Today we were announce 16 carrier partners and 26 [______]partners for [______]. The latest data from [______] experience with[______] has been very positive. In January data average revenue producer subscribers using [______] was 591% higher in uses of there[______]system without [______]. These increases are made possible by the steady growth [______]downwards which is grown from 250,000 downwards to now more than 3million in a period of 4 months. At the end of the March which the First Four quarters of the [______]service [______]was telling 7 different [______]models in had over 500,000 [______] subscribers. We were very encourage [______] on looking forward to the next commerical launch of the [______]. During the second quarter we signed that the [______] For begin at the [______] on March 18th . We were [______] supported by two firm to Lionell [______] made by [______] and Black and White [______] [______]details about this launch were please with the consumerise [______] for working [______]commerical launch of [______] in the next month. ______]also signed at the final agreement with KBBI in Japan .

KBBI has been sign a Panasonic film with Blue and [______] which has prove in very popular The [______] the other time shows location and direction on an map that zooms [______]of the user moves. And the [______]moves the CDI operators were unabling the further technologies . The successful [______][______]and demonstrated over the year appacation downwards at the [______]congress incorn Through appacation written for [______]were down loaded to the GKH form and [______]with no modification. And decision QIS announced the lightened think about the [______] push the [______] technology to the next [______] that discussed in February conference hall. While as business solutions division set approximately 9500 army truck and weighted product in the [______] certainly up from the year ago period and [______] approximate 425,000 unit has been shipped world wide and 38 of the top 40 truck free from US is Army truck and hence operation improved driver safety and security. The continue design made [______] from the quarter and recently need the contract with [______] transportation [______]largest[______]truck load carrier. We made additional progress in Europe with our Europe truck in our work. ______]the past [______]in reading European truck carrier in another one signed it with 3 years service agreement. 3 years agreement will provide [______] services from [______]2000 truck free. We also announce an agreement with United [______] to deploy up 10000 army truck in its on its free delivery service and sales[______]. United Technology is the largest equipment [______] company in our America. In our digital media division 7 major studio announce the formation of the [______] to set stain the digital cinema. This process push out the [______] digital cinema between 12 and 24 months. However some in the [______] we talk project that the [______] of four way of digital cinema were happen more in rapidly that we had i[______] our original plan. In a decision the number of studio in [______]a taken up the position that the MH of digital cinema must be higher than HT TV. To our knowledge [_____] has the only existing recorder that offers full color resolution and higher than high [_____] resolution. We look forward to [_____] in a standardization process with the [_____]. Before I turn the call over to Don I wanted to mention that we're looking forward to our second annual [_____] developer's conference here in Santiago on June 3rd through 5th very excited about this event and was sold out last year with more than 800 developers in attendance [_____] there are primary audiences application developers we've satisfied few seat for our acuity analyst and [_____] is coordinating those invitation. We hope to see several of you there. Now I'll turn the call over to [Don_____], who will discuss Qualcomm CDMA technology. Don[_____]: Thanks Paul and good morning to every one joining by phone on the web and please report at Qualcomm CDMA technologies continued to execute strongly on our fiscal 2002 goals. First I'll talk about our second quarter results then I'll [_____] on new products. As expected we shifted approximately 14 million MSN ships comparative to 16 million ships in the [_____] quarter and 15 million units last quarter. Approximately 8 million of this quarter [_____] 01:10:16 with 3-G [_____] 2001 and were very excited that the mess of 3-G ships surpassed the 50% mark for this quarter of volume. We've now shift the few more total of 20 million 3-G chips as Tony mentioned earlier well over 7 million recorded [_____] subscriber today with 7 [_____] was just turning on. So I think more than half of the 20 million chips have been our early production MSM 5000 chip which is been sold primarily into the Korea and domestic market, the balance of the 20 million is comprised of our MSM 5100 with in a great GPS 1 and MSM [_____] chips which have been use to see the Japan, US and other markets bettering the early stages of the appointment. For example, the MSM 5100 is been use exclusively in Japan's [_____] because of GPS 1 [_____] 01:11:12. We see the [_____] of 1-X building as evidence by the modem 90 1-X stone models in various stages of development and production use our 1-X chips at solution. We also continued ramping production [_____] of MSM 5500 and CSM 5500 1-X [_____] chip shells to support Korea's countrywide [_____] of this new 2.4 MB per second capable data service for the world cup games. Further on the network side we shift CSM 5000 1-X [_____] chips to support approximately 2-1/2 million before [_____] during the second quarter, this in nearly three times as many as we shift in the [_____] quarter to support the new one [_____] throughout the world. From our new [_____] point Q-2 fiscal [_____] with strong for both [_____] and chips for [_____] and market leading to increase forecast of 15-16 million MSM chips for Q-3 FYO2. Now I would like to highlight some new products developments and milestones achieved during the quarter, with chief recognition during the quarter as the world's largest fabulous [_____] company as afforded by the fabulous [_____] association for 2001. This is solid validation of our industry leading wireless technology solution business model. During the second quarter, we announced we've shift too much of total of 600 million CD make chips of all types since 1995. We shift customer samples of our MSM6000 and MSM6050 chip sets, the MSS6000 system software including our new [BREW80I] [_____] 6000 reference platforms and complete documentation. I might [_____] these are all chips forms schedule once again.

The MSM6000 address the need for very low cost 1-X terminal throughout the world. While the MSM6050 include our second-generation positional [_____] core enabling 33lower cost and fast time to position fix. These chip sets also included our new RFT6100 transmit chip the RFR6000 receive chip and the RFL6000 [_____] 01:13:26 as well as two new power management chips with TM6050 and the TM6000 was addressed high and [_____] terminal. These chips are the first members of our eight-generation MSM6000 family based on our 0IF architectural called Radio1, the MSM6000 family of products is truly break through as it is the world's first [_____] solution enabling [_____] components lower cost and smaller size. 1:14:00 [_____] : we have numerous customers already designing handsets with these chip sets. 2[_____] 1:14:04 . in fact I am excited to say we are on schedule to meet our sample schedule for the [MSN50200 ] our first multi-mode chip set for 3rd quarter [_____] 1:14:17 to meet the need of customers for Europe and Asia market. The [MSN50200 ] combines [_____] 1:14:23 also know as [_____] 1:14:26 with GSM and GPRS and supports up to 384 kilo bits per second data rate in the [_____] 1:14:33 mode. It is fully featured chip with support for MMS, [_____] 1:14:37 , java and full internet launch pad features including positional [_____] 1:14:41 . we have achieved several major milestones, in our development of multimode [MSN50200 ] including, the first public demonstration of wireless WCMA voice call with [_____] 1:14:51 providers Lucent, Nortel and Ericson. We are continuing to do inter [_____] 1:14:57 with more 6 different WCMA base station providers. The first public demonstration of wireless WCMA and GSM calls using integrated multi-mode WCMA chipset with our GSM [_____] 1:15:10 in our GSM software stack. The first live international WCMA roaming calls using our small phone [_____] 1:15:18 . we will also demonstrate [_____] 1:15:21 data capability in the WCMA mode. I am please to report we have not missed a single WCMA GSM milestone during our development program . We also added 2 new WCMA chip set customers during the quarter. To wrap up , If you ask me what I most pleased about [_____] 1:15:38 strong position in 1X chips and our early leadership position in WCMA. [_____] 1:15:44 in the fore front of [_____] 1:15:46 with tremendous opportunity ahead of us and ahead of what we intend [_____] 1:15:51 . thank you for listening [_____] 1:15:53 . 1:15:54 [_____] : thanks [_____] and good morning everyone. Before I review our financials I will note expect to file our form 10Q within the next 24 hours. The file in the form 10Q and a similar schedule for sometime now. The FCC recently indicated that they would like all companies to file on a similar extra oriented schedule. Now onto our financials. I am pleased to report that we made our previous guidance for [_____] 1:16:22 earnings per share of $0.20 per share . _____] 1:16:24 result include the company's core operations of [_____] 1:16:30 technologies , [_____] 1:16:32 technologies licensing , [_____] 1:16:32 wireless internet segment. So far the revenues for the second quarter was 659 million down 8% from the year [_____] 1:16:43 . _____] the revenues were down 5% in the final quarter . as expected , revenues declined in the current quarter due to lower [_____] and [_____] 1:16:52 shipments of msn chips. We are also pleased to report the full [_____] of gross margin increased to 67% compared to 64% in the year [_____] and 66% in the last quarter. Due to the improved gross margin in QCP driven by our increasing 1x chipsets. R & D and [_____] expenses are 114 million and 97 million respectively were slightly [_____] then we expected at the outset of this quarter due to our continued focus on cost [_____] . of note our total company employment decreased slightly for the second consecutive quarter. This [_____] operating expense is largely attributed to seasonal factors including resumption of payroll taxes and specifically [_____] and trade show expenses which tend to peak during the first calendar of the year . looking forward we expect [_____] single digit [_____] in operating expenses for the remainder of the fiscal year. 1:18:00 [_____] earnings per share was $0.20 per share compared to $0.23 [_____] and $0.26 in the [_____] .improvements in margins versus a year ago rocks up by lower interest [_____] cash and makable securities as interest rates declined substantially during the past year. The full form annual [_____] tax rate for fiscal 2002 now estimated to be 35% compared to our prior estimates of 34% . the difference is that we expect somewhat lower r&D tax credit for the full year. As a result full form of effective tax rate for the second quarter alone was 36% to make up for the 1% increase in the total year. Now I will highlight our segment results. QCT posted revenues of $344 million in the second quarter compared to $359 million in the prior quarter, and $364 million one year ago. 3G1x chip shipments met our February guidance of approximately 8 million units due to the increasing demand for that exciting new technology. By comparison we shipped approximately 6 million 3G1x chips in the prior quarter, and approximately 500,000 1x chips shipped one year ago. As anticipated, QCT's operating margin declined to 22% compared to 24% in the prior quarter and 23% a year ago. We expect QCT operating margins to improve by a couple of percentage points by the fourth fiscal quarter as volumes shipments increase. QTL reported revenues of $194 million, of which $79 million came from the company's third-party license fees and royalties. This compares to $226 million in revenue during the year-ago period, of which $211 million came from the third-party licenses. The decline in royalty revenues year over year was primarily due to an unexpected buildup of CDMA phone inventories in December 2001, which resulted in recognition of high royalties during the second quarter of fiscal 2001. ProForma earnings before taxes for QTL were $172 million, 9% decline sequentially and 17% decline from the year-ago quarter. Operating margin percentage declined to just under 90%. We expect year-over-year handset average selling prices, which are inter-rolled to the calculations average between 5-10% decline for this fiscal year. QUALCOMM Wireless and Internet or QWI, product of Internet services, wireless business solutions and digital media, generated revenues of $110 million in the quarter, up slightly from the prior quarter, up 11% over the year-ago period.

Increased revenues up from the new Internet service business included BREW and QChat, and ODM, our digital media business. QWI ProForma earnings before taxes were losses of $4 million, compared to a profit of $7 million a year ago, due primarily to our investments in both. Now I will turn your attention to items that are excluded from ProForma. QSI, QUALCOMM strategic initiatives, is not included in our ProForma results. Earnings or losses from the QSI segment relates to our non-core investment activities in wireless carriers and manufacturers, including interest income, increases or decreases in the value of investments, both realized and unrealized, and QUALCOMM's share of incremental losses from consolidated subsidiaries, and investments accounted for under the equity method of accounting. QSI reported a loss of $119 million in the second quarter, and there are three elements of this loss that I want to highlight for you. First, best for losses this quarter were $53 million, including $8 million of equity losses related to our indirectives interests. This is consistent with our January guidance. The second quarter included a full three months of [_____] results versus only 17 days in the first fiscal quarter. We expect [_____] to require approximately $60-80 million in funding through the end of fiscal 2002. Secondly, QSI recorded a $49 million unrealized loss in the estimated value of our Leap Wireless holding, as Leap's stock closes the March quarter at a lower value than the December quarter. Third, the remaining QSI loss this quarter is primarily of losses in equity method investees and operating expenses, partially offset by interest income. Total QSI assets at the end of March were just over $2 billion, which included approximately $575 million of investment related assets. Our plan going forward continues to be the sell of our spinoff best procurer asset. Appropriate cash including multiple securities but excluding QSI exceeds $2.5 billion at the end of the quarter with essentially no debts. In the second quarter of fiscal 2002 we generated more than $300 million of cash flow from operations. We invested an additional $160 million in QSI during the second quarter, primarily [_____] introduced CDMA 2001x, a 450 MHz spectrum in Romania and two other European markets, and investments in Vesper and Pegaso. That summarizes our second quarter results, and I will provide our guidance for the third quarter and full fiscal year. We expect third fiscal quarter ProForma to increase by approximately 3-6% compared to the second quarter of fiscal 2002. We expect third quarter ProForma earnings per share to be approximately $0.21-$0.23. These estimates assume shipments of approximately 15-16 million MSM phone chips during the quarter, including approximately 10 million 3G1x MSM phone chips. Our forecast is based on inputs from our regional business development teams who interact regularly with CDMA operators, our QCT sales and management teams based on inputs from their customers, our forecast of phone replacement rates, as well as factoring in macroeconomic variables in third-party forecasts.

We have been aware of the [_____] recent action to stop alleged handsets of this subsidy. We have factored the estimated of that action into our forward guidance. CDMA 2000 has the unique position in today's wireless market, that it enables operators to significantly increase voice capacity, to very effectively offer data services that enable much needed new sources of revenue. There are many subscribers showing a keen appetite for these new services as well as color-screen phones. If not for the recent [_____] action we would have forecasted a substantially greater increase in MSM shipments for the fiscal third quarter. For the full fiscal year based on the current business outlook we expect revenue growth for fiscal 2002 to be approximately 48%, ProForma earnings per share to be in the range of $0.90-$95. This estimate assumes growth of the CDMA 2000 1x market in the second half of fiscal 2002, as based on the sales of 80-85 CDMA phones in calendar 2002 with a 5-10% decrease in average selling prices of CDMA phones, upon which royalties are calculated. That concludes our remarks. Operator, we are ready for questions.

Thank you sir. Ladies and gentlemen, we will now begin the question and answer session. To give a question press 1 4, and to retract the question press 1, 3. If you are using a speakerphone please pick up your handset before pressing the number. One moment please for the first question. Nathaniel Cohn with Goldman Sachs, please go ahead.

Great. Thank you. Wondered if you could talk a little bit about, I guess Don, on the chip side visibility. You mentioned that you have stronger product orders. Can you talk about how booked you are for that, and also the mix of chipsets, particularly 1x 5100 versus 5105?

As I mentioned, very strong bookings for the quarter and quite offset more than 90% of the quarter at this point. On the mix side, the mood is moving stronger to the 5100 chipset, and that will be the dominant ship as we do the third quarter of fiscal 2002. The 5100 will dominate in terms of 1x chips.

Okay. Are you anticipating a down sequential quarter in Korea in that number?

I think we are anticipating a slightly down sequential quarter. That's correct.

I guess there were some comments during the quarter regarding difficulties getting 1x phones into certain carries, particularly related to the GPS functionality, likely a softer issue and maybe customer specific. Do you have any sort of commentary on what you are seeing in terms of the delivery of some of these new 1x phones here in the States? I know you have had GPS solutions based in Japan. But can you just give us any color on what you are seeing out there from customers?

By the way, we are not aware of any issues in getting phones in the market due to GPS. But there are new 5100-based phones hitting the market now, that have been, for example, approved by [Vorion].

Okay. Great. Can you just talk a little bit about India? You mentioned you just had a trip over there. Do you have some expectations for what India might look like next year? I guess there has been a repeat of the decision to go to wireless local loop by some of the cellular operators. If you could just talk about what your expectations or what Reliance perhaps is seen there, and will that slow all the rollout?

Well we just did recently had conversations with Reliant and I have also had recent trip in India this is Irwin speaking and their plans continuing to move ahead quite rapidly then working with potential suppliers and we hope to see contract signed very soon. The issue of the appeal to the Supreme Court is there little higher of course to read that the supreme court has not yet decided to accept it and we will have to watch that but the previous court did rule in favor of the limited mobility for what the wireless [_____] operators. Right now I believe plans are just proceeding ahead by Reliance and by others and so the assumption I would say is that the limited mobility would be allowed to continue, but that again is being appealed.

_____]: Any color on what sort of magnitude you might see next year I know Reliance has talked about some fairly significant numbers over a multiyear period, but any thoughts on how big it could be.

Right now I prefer not to give any numbers clearly India is a very market with a fairly low penetration at this point the pricing for the wireless loop services the coverage for these wireless loop services the capabilities of the 1x phones the addition to handle data all point towards a very significant market potential, but I prefer not to give any number at this point.

_____]: Okay great and then on last question. of Horizon you had yesterday you had first slightly disappointing net ads related to Q1 results and gross ads I guess we are not so bad but just kind of curious how you look at that and the expectations for $80-85 million shows a little bit of a bump I think in expectations in the US. How are you viewing sort of a roll out here and the progression through the balance of the year and I guess conversion without other handset suppliers or also some of the carriers. Thanks.

Right in fact you are absolutely right if you look at Horizon's website I think in their call they showed an increase in digital subscribers of 1.9 million in the quarter which was similar I think it was 2 million in the prior quarters so that is continuing on pretty well and that of course in not connecting [_____]. So we are in fact the reason that we are seeing in the US market strong is because of placement from sales while the net ads are down a little bit overall from last year, but the replacement sales is going to be much higher principally because of the introduction of new services on 1x and because of BREW in the case of Horizon driving new sales. So that is fundamentally I think still very good from our point of view.

_____]: Okay great Thank you.

Next question comes from Mark A. McKechnie with Banc of America. Please go ahead.

Okay thanks this is for Tony I guess. Tony you talked about 40% was that an operating margin target or pretax margin.

Well I was talking about the margin the earnings line right so the operating earnings line including interest income, so 40% of the interest income is relatively high and apart anyway.

Gotcha, Okay I mean you definitely liked your gross margins this quarter, but spending a bit higher than expected you know clearly Don is obviously in investment mode on the new products that makes a lot of sense, but I want to sense for when do you think you hit that 40% margin target.

Hey Mark but we did not reduce those [_____] well on time.

Well it is infact as Bill mentioned the expenses were little below what we predicted and we have been saying that the March quarter would be higher because of the payroll taxes and because of these particular seasonal factors. So from a headcount point view our headcount overall has declined slightly. We have been slightly increasing the QCT and QIS the BREW investments, but in other places we have been cutting back and I would say our expenses really in good shape and Bill predicted expenses growing low single digits over the balance of the year and that would be essentially on flat headcount, so we are simply looking to do even better than that. So I think expenses showed be pretty flat and then revenue drives the operating margin clearly with our gross margin continuing to be very good.

Did you give the timing for that 40% target.

well certainly by fourth quarter hopefully also in the third quarter, but fourth quarter definitely.

And just quick on when I have there Don on the zipped products did your ASP give up significantly on those.

Of course we are just now on the sample mode so none of that hits production yet, but the answer is yes it will go up and it gives greater value to the handset might there because their cost go down, but again we keep assumptions per share of that.

What are you thinking about 15% better pricing on those are...

It is slightly better.

Got them. Thank you.

Next question comes from Tim Luke with Lehman Brothers. Please go ahead.

Thank you. Couple of quick questions.

Yes these are regions where we think there is possibilities again if the spectrum is available that some of the existing GSM operator could provide 3G technology fairly early end relatively low cost by making use of this technology so those discussions are ongoing. I have recently visited several other countries in that area including Taiwan and Indonesia.

Just Don if you could give us a sense of when you might except the customer announcement for your WCDMA, GSM [_____] chips to follow.

Well some of that does depend again on some governmental actions so it is really hard to forecast so I prefer to just wait and we will see how those do move ahead.

Just on the chip side Don is there any clarity on when you might see some announcements in the initial customers for the [_____].

Yes definitely as we introduce by September with the announcements follows.

Is there a number for the ASPs what we should associate I think you talked about 5-10% declines in the handset ASP what that number we should be using basing it of in 2001 for the handset. This is clarification on the handset ASP from 2001 that we should be pacing enough.

Tim your are talking the full year versus 2001.

Yeah what should be you think as an ASP for 2001 and trying to figure out what the average ASP that you are using or 2002.

In terms of the absolute number for 2001 right it was somewhat below $200.

One last question Tony is the framework for the market I think that in North America in 2001 there were may be 13 million [_____] cards and may be 20 million replacement firms giving you I think the volume of last year was around 33 million CD mainframe sold in North America obviously this year on a slightly low net add number some you are looking for I think you said at $42 million firms in the North America, but that is obviously a very significant number for replacement and could [_____] how that trapped may be through the first quarter in terms of how are you seeing the market and any visibility on how you feel towards that 42 million through the quarters. Thank you.

Right well in fact we would see the 2001 numbers [_____] what you have said Tim but I think that is probably the substantial difference in the way we are looking at it as the some of the analog replacement and so the upgrade is opposed to replacement. The dish _____ is high as in your number that for replacements a bit lower. But this year we are expecting to see as we have said slightly lower net adds, but substantially higher replacements and I think we are seeing as best we can see in the first quarter and we are getting some of the day for the second quarter now for our fiscal second quarter. We are tracking to the replacement rates of close to and overall 50% of the total market subscriber base as if end of last year.

You said you are comfortable with the 13 weeks of one-half - inventory in the channel. Do you have any incremental color on the levels they are and you are comfort levels with the inventory levels in the channel?

I don't have any update on.

Yeah, I would just say that we are comfortable at this point, I think we are very comfortable. As we have said earlier, the mix is now moving strongly for 5105 and 5100 and so you know that means a lot of non-Korean phones are feeding the USA, Japan's launch of all 5100 and announcements of shipments in Latin America.

Congratulations on the quarter. Thank you.

The next question comes from Ed Snyder with JP Morgan_____. Please go ahead sir.

Thanks. A couple of things. One, visibility on large-scale deployment in America carriers I know there are lots of Linux service number vary. What do you expect to see the peak deployment of phones in the several quarters or this [panel] relates all of the next 12 months?

I think its going to clearly ramp up as new models are introduced and I think its when Sprint starts in the summer where they were already selling 1x phones ahead of that launch so that ramp for them is beginning obviously for Horizon also and others so its going to be a normal kind of ramp and its going to accelerated into the Christmas selling season. Particularly a lot of new models I think coming out for that new selling season.

I think the other aspect of that is how the data gets picked up and I think that will infact start more slowly people begin to get some experience a little bit of advertising in the part of the operators and so I suspect that will infact probably take into next year to begin to see a very substantial increase in those apples.

So we could see that particularly _____ stand over the next 8-12 months or so I mean its increase any measure of what happens replace your markets certainly we should expect an acceleration or replacement demand I am just trying to model how long that would that spread out over?

It's hard to exactly say, but to say anything we have said I think it's going to ramp up, but fairly significantly over fairly period of longtime.

The numbers go out I know the subsidy cuts there obviously reflect, but the increase in replacement demand in carrier due to the deployment of 1x look like it obviously cause the higher replacement rate that is downfall by kind of a slower rate based on a lot of people. Do you expect that the same effect in USA in late 2003 or so?

Its not clear that some of the take up or some of the more advanced phones has really dropped off it Korea. Clearly, the subsidy is going to color that a bit but I suspect the high-end phone to be _____ somewhat less subsidized because they have been selling on their attractiveness. I think the new models coming into states will continue the increase the chipsets. Capabilities are increasing in the number of applications on those phones are increasing I think we are going to be and of course nationwide networks have yet to be launched by both horizon and sprint and the emphasis by some of the other regional careers are not there yet.

I would also say that I would not view it is being just onetime replacement cycle. I think this is a business process that's going to be ongoing. Certainly got in Korea upcoming with 1x Evdo launch another driver for replacements so I think nothing else you are going to see going forward and new capabilities being introduced on a regular basis.

Great and then just housekeeping it, we expect a 36% tax rates for the rest of the year or next quarter?

We are expecting 35Z% for the full year, 36% was only in the second quarter to catch up because we had recorded a 34% in the first quarter. So 35% in the expectation for the fiscal year.

Great thanks guys.

Ladies and gentlemen due to time restraints we ask that to limit yourself to one question and one followup question. The next question will come from Kim Long with Cs First Boston. Please go ahead.

Thank you. Tony if you could just revisit the Korea numbers I don't know if you have given a break out of what you had actual expectation is out of the 30 million Asian unit and you talked about the already being factor into guidance could you just clarify what's attracted into the 80-90 or 80-85 million and just love to see where the change in your view was over the last few months and just related to that if you just could talk about the impact that some weakness might have on ASPs and chipset inventories in the channel? Thank you.

We thought you will be happy with this breaking down the market a little more than we had it before and duly shaking ahead. The impact of the MIC action factored into our outlook has build would have been substantially more in Q3 and if that action have been taken [approx] to the June of a million or so units in the quarter, but we do as if have been in the past we expect to see recovery from that action and not to have too big of an impact in quarter 4 and then in terms of the related impact on overall ASPs because of Korea has been a high-end market as we have been saying it will be a slightly negative impact on ASPs but I think that will be offset by introduction of telephones into the U.S. which will tend to drive the U.S. ASPs up so I don't think overall you are going to see too much impact from that.

Okay. That one million units is that on the chipset side or on the phone side because if you look at the article yesterday it imply you know it could be in the month of April down 500,000 to a million units so is there a risk that it could be more than that on handsets or rather than chipsets?

It's obviously just a matter of timing because all of the phone sold in Korea are essentially I think all of the phones sold in Korea are using our chips so in timing wise and again we have said that the main impact will be in April with recover I think in May and June. I think we have reasonable about factoring that impact in our guidance.

Okay thank you.

The other area to watch in Korea is the impact of all the various new capabilities that are going to be demonstrated as part of the world cup economic drive there. They are indeed planning to showcase screen capabilities and products quite extensively I suspect that will influence some local sales of some of that brand new equipment. So with the deal capability now going commercial with a set of capability is being demonstrated and a whole set of being launched in connection with world cup I think that excitement is going to build up despite the problems of subsidization.

_____ with Bear Sterns. Please go ahead with your question.

Thank you. I have a question still I think we are getting a lot of questions probably on the unit projections for this year and I am still trying to get a better grasp on that forecast because if I will get Q1 unit volumes that you shipped 14 chipset lets say 16 million next quarter that gets me to about 30 million you mentioned 8085 so this would imply that second half and given the fact that Nokia pretty much stated in Q1 that their CDMA shipments were fairly light and Motorola for the most part now starting to really go use more and more your chipsets and also wireless handsets doing that strong. I assuming that you pretty much have the right now well over 90% market [insurance] chips. So this would imply that the second half would have to build from 30 million to somewhere around 50-55 million which is almost doubling from the rate that we have here, are you assuming some gains how this plays up? I think what you are understating is that the fact that Nokia and Motorola sales in the first quarter. Because while Nokia is staying flat they are actually selling a reasonable number of [95A] phones in the U.S. and in Latin America in particular. Motorola has been continuing to sell [95A] and [95B] phones in substantial volumes. So while our chip shipments, as you state, certainly the market is more like what I say 18-19 million. So it is that kind of run-rate. So we are really not looking at a huge acceleration in the second half to get to 80 million. Q]: Okay. That sounds good. It clarifies. A very quick followup. On the [Reliance], are you going to be funding this network or is it coming from external sources funding for that?

__________]: While we made a commitment to invest $200 million into [Reliance] Communication. But that is a small portion of the total capitalization. We have 4% interest in the company. So Reliance is committed to investing substantial dollars and they are looking for other investors to make commitments also. So that is [_____] 01:50:37. Q]: Thank you.

Your next question comes from [Louis _____] with Morgan Stanley. Please go ahead.

LOUIS _____]: Good morning. A couple of points of clarification if I could. Bill, just going back to the expected [MIC] action, are you expecting a similar impact on both replacement handsets and new subscriber and such demand in Korea. Could you just clarify that for me?

__________]: Well, new subscribers have been relatively low. They did just [tick] over at 30 million subscribers recently but that was up from 29 million. So the market is very heavily oriented in Korea to [change] and replacement.

LOUIS _____]: Okay. So you are pointing the impact across both the new subscriber element and the replacement handset demand.

__________]: Yes.

LOUIS _____]: Okay.

__________]: Yes, they are heavily weighted to replacement.

LOUIS _____]: Yes, okay. Then, with regards to the [$]2.5 million [CSM] voice channel equivalent units you shipped, I think about [1x] you said. Can you talk about what regions those will end up getting deployed in?

__________]: Well, certainly all of that is going to North America but we will see that also go to other parts of the world - Latin America, India as well as others.

LOUIS _____]: Okay, great. Don], you mentioned 90% booked. Is that to 15 or 16 million, or mid-point?

__________]: To that range.

LOUIS _____]: Okay. And with regards to [EBPO] line-cards and handsets, can you just talk about the commercial shipments that are being made and if they are getting royalty there? How many handsets you think we will see in the next couple of months?

__________]: I will just take the shipments part of that. Clearly, the big launch is for the World Cup games at the end of May and early June. There are at least six different handset models coming out [Vio]. Some very neat multimedia camera phones and so we have continued to ship the [N5500s] for those terminals during the quarter as well as [CSM Plus 5500] which is a build-out of those networks.

LOUIS _____]: Very good. Thank you.

P C Revlard] with Salomon Smith Barney, please go ahead with your question.

P C REVLARD]: Great, thank you. Don], can you give us an idea of what should we be expecting for on the margin side. We are seeing ASPs and the [MSMs] starting to [_____] 01:53:26 if not trending up. Voluems are starting to improve. It is the mid-20% range where should we expect given the heavy R&D investment or is that something we can see start over the next 12 months or so start getting back to the 30% level.

__________]: Let me put that one to [Bill]. I think he did address it during the call. Now you just readdressed that one.

__________]: Sure. What I had indicated was that we expect [QPTs] [_____] 01:53:53 and [DPT] as a percentage of revenue to improve by a couple of percentage points by the fourth fiscal quarter.

P C REVLARD]: Is that something that we can expect over the next 12 months? Can [we expect] the trend up as volumes improve and ASPs stabilize or will the heavy R&D investing keep that only in the mid-20 to high-20 range?

__________]: Our target is to continue to show improvements in that margin as volumes increase.

P C REVLARD]: Okay and then [Bill], just a followup. Can you give us any idea or expectations for the impact to you guys with [Telefonica's] [participation] with [Pigasso]. You guys have got obviously some vendor financing exposure there as well as some bridge loans. Is it just something that the exposures are just going to remain the same or just going to go to [Telefonica] now or do you guys expect that to actually get the money off the table there on some of those bridge loans?

__________]: Right. As we had reported earlier, we do expect to get some cash back out of the deal but we will remain as well as secured lender to the new [Telefonica] entity. I would say just on that point we are continuing negotiations with [Telefonica] towards definitive agreements and we are certainly optimistic that we will reach that agreement in the near future.

P C REVLARD]: Great, thank you.

Doug Schwarzinow] with UBS Warburg, please go ahead.

DOUG SCHWARZINOW]: Thank you. Bill], can you just repeat what third party royalties and license fees were during the quarter [this past _____ 01:55:32]. ASPs in the [QTL] business - would you have expected in the second quarter that they were down at the higher end of that 5-10% guidance? Would you expect them to take [down a bit more _____ 01:55:45]. I think you indicated that because of the makeshift period maybe in North America. And just as a follow-on, given the cash earned [_____] 01:55:54 of roughly $412 million in [QSI], what is your current expectations for that full year given what you know about [investment needs], [_____] 01:56:03, cash in getting out, as well as funding to Reliance? Fine, thank you.

__________]: Okay. First to [consider] the ASPs, we are seeing a very consistent ASP as you go region by region now for a few quarters here. So region-by-region we are not seeing a [specific] decline in ASP. [_____] 01:56:26 decline in our weighted average ASP because a proportion of sales outside of those regions that are demanding the higher-end handsets in the recent past, that being Korea and Japan, the proportion outside those regions has increased. So we have seen a small but steady decline in the ASP in the last two quarters based on that weighted average and that is why we projected our guidance for the year of between 5-10% AST decline.

DOUG SCHWARZINOW]: Was it down at the higher end of that range in the second quarter towards the 10% year-over-year?

__________]: It has been at the low end of that range thus far and so it is a cumulative total that will let us to the 5-10% decline for full year. Then, on [QTL] our total revenues that we reported were $194 million and the third-party element of that was $179 million. I think your last question was on the [QSI].

__________]: When you look at the pieces - Reliance which went into 200s. We said that 60-80 is for [_____] 01:57:53. We are committed to around 100 for [Pegaso] and 100 for [Inqua]. So there will be some other things in addition. But that is the range that we would expect for the full year of investments in [QSI] and if the [Pegaso] deal goes through...I should say that the [Pegaso] deal as we signed definitive agreements, it will be subject to regulatory approval. So it will take some time for the deal to close. But again, we would expect to see some cash back from that.

Thank you.

Mark Roberts with Wachovia Securities. Please go ahead.

Thank you and good morning. A couple of questions for Don and then a followup for Bill Keitel. Don, can you give us a sense of the mix of revenues between MSM chips and CSM chips? Historically it's been more about 85-90% MSMs, 15% CSMs. Was that mix much different this quarter?

No, not substantially. As we mentioned, CSMs are up a little bit but not substantially different.

Okay. And Don, on your WCDMA chipset customers: you had previously announced two OEMs who were going to use the Qualcomm WCDMA chipsets, and you mentioned two more. Am I correct? That brings the total to four OEMs who've announced that they're going to be using your WCDMA chip?

No, we'd previously announced three, and we've added two more to that.

So it's five.

Yes, that's correct.

Okay. And Bill, looking at the $119 million loss for QSI, Vesper in that is about 45, [Leap] is about 49. Can you give us a sense of what the realized marketable security losses were relative to the losses from equity investments of the remaining, what looks like, about 25?

The way I look at Vesper is what I reported in my summary for you is Vesper totaled a $53 million loss, and what I added in there was our proportion of [Velcomm], which is an equity holder in Vesper. If you add our equity loss we recognize from [Velcomm] as a result of their position in Vesper to the $45 million, you come up to a total of $53 million for Vesper.

Okay...

Then for the remainder, other than that $49 million change in estimated value of our [Leap] holdings, is primarily losses in our other investees that we record on an equity basis. The [_____] ones there would be [N-Comm] , which is the operator that's beginning the CDMA 1X service in Europe; also [Wingcast], which is the entity that's driving Telematics; and lastly there are a few other equity investments that we record on an equity basis.

Okay, so you're saying that there was very little to no realized marketable security losses in the quarter?

A slight gain, actually...

Yes, a slight gain...

Okay, thank you.

Ladies and gentlemen, due to time restraints, we have time for one final question. Brian Modoff with Deutsche Bank, please go ahead.

I have a few questions, if you don't mind. Looking through the revenues sequentially, you're looking in your guidance at revenue up 3-6%; and looking at the $15-plus million ASICs the other businesses are going to be very flat or even perhaps weaker, you'd expect a higher revenue growth sequentially, based on $15-16 million ASICs. What am I missing there exactly?

No, relatively flat.

Okay. Irwin, you've talked about in the past your WCDMA forecast being 2004 for volumes, any changes to that?

No. I think, still looking at 2004-2005 for substantial numbers of subscribers...I'm hoping it could be faster, but various activities on WCDMA may seem to indicate a little bit of a lengthening as to some of the more optimistic projections. So we would hope that that could occur still, but I'm staying with that projection for that time estimate.

Are you talking about IOT testing, Irwin? Or a length of it?

For the testing, the feedback into the [standard] process is clearing up any problems that do show up, which always occur with these kind of activities. It just takes time to launch a new technology and then really ramp it up into substantial commercial use. Again, if the gods really smile down on this activity it can go faster, but the previous experience has been that it does take time.

Couldn't sound any more optimistic. Don, three questions for you: The 6X phone for Latin America, what do you think the reduction is going to be in terms of the cost of that phone, the ASP of that phone and when do you think it's going to be available? How are MASPs trending here over the near term? And finally, do you have any measure of what percentage of your ASICs you're shipping that are not for handsets or things like Telematics, and how that trend is going?

A lot of questions in there. In terms of the 6000 handsets, I think we'll see those hit Latin America probably in the first quarter of 2003, somewhere in that timeframe - possibly earlier, but probably in late 2004-early 2003.

Great.

Clearly, with the mix moving towards 5100s, we're in the next couple of quarters going to see a trend up in the handset ASPs.

And the last question, what percentage your ASICs are for non-handset shipments and how's that trend?

It's still a very small percentage. We're seeing some clearly on the data card, just seeing a little stronger trend on that; but Telematics is still fairly early and I think it's going to be early in 2003-2004 before we see substantial quantities of Telematics [turnover].

Okay, thank you.

_____]: It's also going to be interesting to watch as these data services come up, particularly now with the [DO] coming along. What number of users rely on their handsets for providing kind of an external modem, Bluetooth or wire, for their laptops or PDAs versus how many of them will use specialized cards - that will probably depend on how well the manufacturers can bring down the cost of those cards.

_____]: Thank you all very much for attending this morning. We are looking forward to some potentially interesting developments as the CDMA 2000 1X gets launched nationwide by the two nationwide carriers here as well as the regional operators. As the [DO] begins some commercial operation, as KDDI, who have now introduced 1X in Japan, begins to sell what look like some very exciting handset models, as we think China will in fact move ahead now that the network is stable, and as we look ahead to India and some other developments down in Latin America. So many things happening worldwide; it's going to be a very interesting year for CDMA, we think, and hopefully we'll have some more to talk about next time. Take care!

Ladies and gentlemen, that does conclude your conference for today. You may all disconnect. Thank you for participating.