Your buddy Snyder in the news again
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Part of the market's valuation of Qualcomm is based on CDMA getting into China, says Ed Snyder, analyst for J.P. Morgan H&Q in San Francisco. "Any tension with China detracts from that story. A slugfest with China would delay or cancel that deployment.
"Qualcomm can't catch a break on this," added Snyder, who has done business in China.
But he also blames Jacobs for "incredible hubris" in telling analysts that Qualcomm's earnings estimates should be raised in light of its China pacts. "Their hype about the China deal sometimes cut as close to duplicity as possible," Snyder said.
Now, with the recent China tensions, Snyder has seen a change of tone from Jacobs. "He used to be really bullish, but he's taken a cautious stance lately," Snyder said.
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But Qualcomm needs" China more than China needs Qualcomm, analysts say.
The dominant wireless system in China is Europe's GSM, with 90 million subscribers, Snyder notes. CDMA has only 200,000 Chinese users, he says.
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"Why did the Chinese let GSM take off and fly? Because it's European and they don't have a bone to pick with them," Snyder said.
Qualcomm, he says, crowed too much about .CDMA being made in America.
"When China's not allowed in the World Trade Organization because the U .S. holds things up, the Chinese can hold up some thing quintessentially American -CDMA," he said. "Qualcomm branded it that way themselves."
China is close to neck-and-neck with the U.S. in its size as a wireless market, says Mark McKechnie, analyst with Banc of America Securities in San Francisco.
"China's been a huge GSM customer for Motorola, Nokia and Ericsson,"
But Nokia Corp. and LM Ericsson AB don't face the problem of anti-Americanism in China. Nokia is Finnish and Ericsson is Swedish.
Motorola, meanwhile, is more vulnerable.
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