Ramsey:
It would be typical of FIDO to become Qualcomm's largest shareholder...after the stock has quadrupled. For years Fidelity's telecom analyst, Nick Romano, took shots at Qualcomm and always bought the Ericsson story, hook, line and sinker. So much for value-added research.
For what it is worth, I would attribute yesterday's move to MOT's announced CDMA order in Brazil rather than the pdQ or other background noise. Accelerating CDMA infrastructure deployment in a major population center like Brazil has real economic benefit to Qualcomm from a royalty and ASIC perspective.
Investor focus on individual products, like the Neopoint or the pdQ, really doesn't make a lot of sense. For example, QC's expectations for the pdQ have consistently been set around the 'couple hundred thousand' range, not the millions per quarter territory. Even assuming a $1000 ASP (average-selling-price to Jon), we're talking about an incremental $200mm-$300mm in revenue. Assuming a 10% operating margin, and a 35% tax rate, I would estimate the pdQ's success or failure to be mean $0.08 to $0.10 in EPS to Qualcomm. Yeah...I would be happier with the extra dime, but the pdQ's success is hardly central to the investment case. I would be much happier to see QC drive 10% margins on the core handset line, which would likely add $150mm to the P&L. It's important to keep the deltas in perspective.
Best regards,
Gregg |
