Sommers,
<< would it be rude to ask you to quickly bullet your reasons for loving Q? (post 7712) >>
Not in the slightest, although I should add that while I "love" my wife, daughters, and mother, (and golf), and like my job, I simply invest in Q. Actually, upon reconsideration and being up 618% YTD on my initial investment in Q & 514% YTD on OMPT, perhaps I should learn to love the wireless stocks I invest in, and I would save the risk of boring others by making the preceding phrase my single bullet in response to your post <g>.
Since you asked:
These are my personal reasons for making Qualcomm one of my core long holdings:
1. Qualcomm has solid fundamentals - an excellent and credible management team - and a sound (new and improved) business model
2. Qualcomm is pure wireless play, in a hypergrowth industry, that will experience at least 2 more periods of hypergrowth (2.5G & 3G) in the next 5 years.
3. Qualcomm is entirely focused on providing the enabling technology for one of the 3 significant technologies (cdma) that comprises the 2G (and 2.5G) wireless industry. CDMA is the fastest growing technology in 2G wireless. > 15% market today and > 20% by 2003/2004 (measured by net subscribers).
4. Qualcomm is the only Gorilla in an industry previously dominated by Princes (the Big Three and 6 or so wannabe Princes). As we know there are "tornadoes without gorillas" (RM page 62) "where no one vendor controls technical standards". Such was the case with the 2G market until cdma established critical mass. Although Qualcomm derives no revenue from sale of inastructure and handsets for 2G/2.5G technologies other than cdma it derives revenue from ALL infrastructure and handset sales for the cdma specific sector of the overall wireless industry. CDMA is a Proprietary Open Architecture with High Switching Costs. The dominant 2G technology is by contrast a committee controlled architecture (page 53) which also has high switching costs but discourages the growth of a gorilla.
5. Qualcomm's enabling technology appears to provide a cleaner, easier, and more cost effective migration path to 2.5G, and 3G, than competing technologies, making it a potentially extremely competitive technology choice for new networks in many (but not all) regions of the world. [the flip side to this is that as it relates to network reuse and upgrade potential for existing networks, there are extensive barriers to entry, and high switching costs, for networks using competitive technology. A realistic appraisal of the investment potential in Q should take this into account, IMO].
6. Qualcomm is forming a superb value supply chain and significant strategic partnerships (characteristic of a gorilla).
... and MOST importantly:
6. Qualcomm is the 3G GORILLA. Q IPR is primarily in the cdma air interface. The cdma air interface is the heart and soul of all 3 primary 3G technologies. Before 3G has its 1st commercial implementation Q has managed to insert its proprietary open architecture with associated high switching costs inside all 3 committee controlled architectures. Q gets paid on every 3G implementation. WOW!
... also:
7. CDMA finally does data. Good timing for several reasons. Never too late, IMO, even if not leading edge.
Rather than provide "bullets" I provided expanded bullets (sorry about that). I do have one question for you about your post if you would not mind responding. You stated:
<< Maybe I've got my panties in a twist over nothing, but isn't an 18 month lead quite significant >>
Could you please explain what "18 month lead" you are referring to?
In closing I leave you with a link (as is my habit) to an article published today called "U.S. Lags in Mobile World" subtitled "U.S. vendors scramble to catch up with wireless advances while Asian and European customers surf by cell phone":
pcworld.com
Sorry for the long delay in responding but remaining very long on Q (more at 193 yesterday). Also remaining VERY technology agnostic and (hopefully) open minded in the hypergrowth market of digital wireless mobile telephony.
- Eric - |
