Dave... I honestly don't understand the way QCOM management handled this. All through the summer they stressed that the handset division is a vital part of Qualcomm, that everything is coming up roses and Qualcomm's destiny is to become a leading smartphone manufacturer.
Competition arrived to the North American CDMA handset market last June - and now, three months later the handset division is suddenly a piece of extra baggage that needs to be dumped ASAP. What's the deal? Were they going to dump the division all along and intentionally misled investors by talking about rising handset margins and dazzling future? Or did they really wake up to the reality only now?
If they weren't into phones in the first place, did they need to alienate Nokia and Motorola so thoroughly that these companies decided to make their own chipsets? How will the Globalstar handset manufacturing survive if the CDMA handset division goes on the block? Is that the next write-off down the road?
More to the point - what price can they get from the handset division now that everyone knows they have to sell it? Usually companies play hard-to-get until they sell a division. They don't telegraph that intention in advance, because it wrecks the bidding process. Ericsson has already decided to build their CDMA project on the T28 platform. That's part of their plans of making T28 a leading platform for GSM, TDMA and CDMA markets. It's the blueprint for Nokia's and Motorola's recent success - a coherent design philosophy that creates a clear brand image. How do you graft Qualcomm's current models into your portfolio without ruining it? Thin Phone may be thin - but it's also ugly enough to scare women and small children. Ericsson could always buy the factories and just convert the product lines, I guess.
Siemens was interested in Qualcomm handset division earlier. I'm not sure they are that gung-ho anymore now that their S25 and C25 series are the biggest hit of the summer in Europe. They wouldn't want to be saddled with pdQ when their own internet model already has WAP, color display and hundreds of hours of stand-by time - at half the weight.
Manufacturing capacity is at premium, though... just that may fetch a good price. As an investor, the "well, here's our strategy for *this* month" approach doesn't do much for me. Try to understand my limitations, Dave... I'm one of those sticks in the mud that prefer clearly formulated long term strategies that the company in question sticks to.
Tero
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