There's no doubt that weaker demand for PC/computer related equipment and services caused a drop in sales, profit margins and earnings of companies with a major portion of their business in that sector. But in rushing to downgrade the companies in more computer related businesses, the typical street analysts have dumped on most of the technology sector, without bothering to distinguish between computers, fiber optics, and wireless telecommunications.
In addition, there were some obvious examples of poor quality management, which led to lower profits at companies like Lucent. When Lucent reported earnings problems, Corning, JDSU, and the portion of Cisco that deals with fiber optics didn't experience similar problems.
It is easy to lump QUALCOMM with Nokia, when in fact, just the opposite should be done. Nokia is a company desperately trying to maintain the profitability and supremacy of an outdated technology, and desperately trying NOT to have to pay royalties to QUALCOMM. The longer it can prolong the use of GSM and delay the introduction of CDMA, the less opportunity QCOM will have to obtain royalties and other income from its superior technology. On the other hand, customer demand, such as that which we are seeing from people switching to Sprint PCS and Verizon, is forcing the service providers currently using GSM and TDMA to think about upgrading to CDMA. Look at the details. Let the customers make the choice. And hang on to those QCOM shares! |
