Revenue for the quarter of $1.2 billion, that'll be $5 billion for the year. With only 190 million subscribers, that's $26 per subscriber. When there are 5 billion subscribers, that'll be $130 billion. With a profit of 40c on the dollar that'll be $50 billion a year profit.
It should take until 2015 to get to 5 billion subscribers. With a current market capitalisation of $50 billion and a 10% growth rate that would be $140 billion by 2015. $50 billion profit on $140 billion market capitalisation is a pretty good return.
That assumes nothing new is achieved other than continued CDMA technological development along present lines as mobile cyberspace and cyberphone demand grows. No Globalstar, no Eudora magic, no BREW success, no Q currency invention.
It also ignores the fact that development costs are now spread over only 180 million subscribers. When development costs are spread over 5 billion subscribers, the unit cost will be tiny. Unless competing technology gains a lot of ground, the profit margin will zoom. Royalties are pure profit [less a little for enforcement and other administration]. The rest is software [being fabless] so unit costs zoom down as the number of users zooms up.
So, maybe profits will be $100 billion a year in 2015. Since the USA tax take will be so huge, the USA will ensure that cash flow from the other 96% of the world will be protected, using the sole remaining superpower's enforcement abilities.
With profits of $100 billion a year, QUALCOMM's market capitalisation should be about $1 trillion. That's 20 times its current price.
Suppose though that Globalstar is fixed up and gains 100 million subscribers, all buying QUALCOMM cyberphones [the manufacturing process would probably best be handled by the likes of Nokia, Motorola, Samsung, Kyocera under license]. Or maybe BREW will make some money. It could be huge. Or Eudora becomes an instant messenger for cyberphones, carrying pictures, voice and data. Or QUALCOMM creates a cybercurrency to compete with monopoly state fiat currencies. That would be a very, very huge deal, making the CDMA aspect of QUALCOMM trivial [a bit like OmniTRACS isn't important in the bottom line now although OmniTRACS income enabled CDMA to develop].
Right now, at a $60 share price, the return of about $1 a share is pretty reasonable. If there's also a 10% share price gain per year, that's pretty exciting, ending up in 2015 with a 30% income on $140 billion market capitalisation.
Since there are already well over 1 billion cellphone users at a time when devices have been expensive, minute charges excessive and functionality limited to talking and text messaging, it's not difficult to imagine 3 billion users when all the functionality of mobile cyberspace at low prices is considered.
India and China are enjoying good growth, so the 20th century idea of most of the world living in permanent poverty and Malthusian population explosion and Club of Rome catastrophe is rapidly fading. Now the worry is maintaining populations.
The best is obviously still to come. The fun has begun. It's nice to sit here in Auckland and see CNN reporting on QUALCOMM's results after years in the wilderness.
Mqurice |
