It's a question of the homework that you are doing and knowing what the company that you are investing is doing. Unlike some of the more ridiculous stocks; ie Netscape, Presstek, Zoltek, Iomega's et. al; Qualcomm is a very serious company that is at the beginning of it's growth cycle. It boils down to your homework. I freely admit that when you call up fundamentals on this stock, it immediately screams SHORT.
Then again you have to look at it's business. Over half the wireless systems in the US will be using or are now using their technology as of Dec '96 and new locales turning up every week going into the summer. But that is only Phase I, there is more to come. That alone is lucrative in royalty payouts. These aren't going to dry up, as it doesn't matter whose phone or equipment that is sold. With $2 Billion in orders from Sprint and Primeco alone and initially, does it make sense to short. Then their is the fact that only one other manufacture has a phone available; Samsung.....a household name if I ever heard one. Hey they got's to show QCOM the money for everyone of those phones they produce and sell!! The big two (Motorola and Nokia) won't be to market until summer, that's another Q. The other biggy, the squareheads at Ericsson, refuse to support IS-95, so they say. That's one QCOM won't have to worry about...... but wait Ericsson is threating to build IS-95 phones! They'll have to belly up to the bar just like everyone else and show QCOM the money!!!!
Then you go further and look that they are providing the equipment in the form of base stations, handsets and the chips that go into others phones. Frankly, if you are only doing surface study and determine that the service providers are giving away the phones, ergo their profit margins are thin, then you have or are making a mistake. The service providers are paying full price. If that is the case then short Motorola, Ericsson and Nokia. I see analog phones being given away every day.
Then there is the spoiled American syndrome. You look at this stock and do your surface homework and determine that the US market is highly competitive. Another mistake. The real growth is the rest of the world, which I understand to have about 5 billion people that would love to talk on a phone. Caveat here: I'm an engineer and telecommunication consultant that has specialize in foriegn operations. In other words I've lived in Africa, Middle East, Asia, Latin America and Europe. I know what the market is like on those continents. Wireless will be the vessel for them to bring telecommunication to the masses. Ooops, I think that's more sustain growth for telecommunication equipment providers in general for more than a little while.
I'm not going to even get into the Omnitracs/Boatracs and Eudora side of this company, as they are growing and generating profits. Boatracs alone is a lucrative market if you consider alone the barge fleets worldwide. It's far cheaper than say INMARISAT.
Did you short the stock this morning, pretty dismal day. I guess that it will go down some in the future. The distant between two points isn't a straight line in the stock market. Hey I play puts after a strong run up myself. Made money at it. Even made some of the longs unhappy when I suggested that run was over. Hell, I've traded this stock. It's just not one that I'm willing to short. If the news comes out that China or India is going to install a CDMA system that utilizes IS-95 and service over 1 billion people, it becomes a freight train to the upside. Again it doesn't matter who selling the equipment, Qualcomm gets a piece of the pie. This will be going on a fast pace into the next century.
Riddle me this; with the NASDAQ down 12%, networking stocks in a bear market, the vaunted Wintel getting it's teeth kicked in, the Motely Fools specials getting massacred, Cabot Market letter wouldn't be suitable in my outhouse at the hunting/fishing camp: QCOM is but 5 points down from it's 52 week high? What is this a jewel that has been overlooked by the shorts? Go look at the increase in short interest in the WSJ; it increased big time between Jan and Feb, yet the stock doesn't go down, but a whopping 5 pts. from it's high. Hmmmm. Tricky timing to make money on the short side.
Good luck in your investment. Here is a hot tip, short Planet Hollywood when it goes over $20; I will be and I've done alot of studying of that stock. Made money shorting it too. Give my rdgs to chuckj, we miss his foolishness |
