Greetings, SI friends. Well, QCOM did well enough the last year that I can now afford $199 (Bloody share and a half) to join SI. I'll introduce myself with a post that I recently responded with to a person (friend) who mentioned the current times a 'Q low time'................
I have a feeling that there are a lot of people who are looking at current times as 'A low time'. I guess this concept amazes me. Perhaps this post is worth a read for all you real longs (plan on holding longer than a week).
Two months ago, December 10th, QCOM was at 98 (split adjusted). From that date, we are up 35% to $132. Now on Dec. 10th, we were up 78% from two months earlier when we were at $55/share on October 11th. So today we are up 140% from 4 months ago.
Putting things in perspective, I understand that we moved up $153 a share on December 29th. Hell, no one was happier than me. To be honest, I have never owned a stock that went up over $150 a share in a day. In fact, Until QCOM, I never owned a stock that wentup over $25 a day.Sure, some of you got in on those INET IPOs and may be used to returns like that. If you are out there, I'm sure all your stocks perform like that on a daily basis...........not..........
On Dec. 10th The Nasdaq was at about 3600 and today it finished around 4400 - Up 22%. The Dow is 10400, down from 11200 on Dec. 11th. A decrease of 7%. So Q has outperformed the NAZ by 13% and the Dow by 42% in the last two months.
But two months is a long time, right? Look at all the things that have happened:
1. HS division sold to KYO when everyone thought NOK was the buyer
2. Only beat estimates by .03 (.01) and Quarterly EPS growth was under 25% at 22% from the earlier quarter where it was only up 20% from the quarter before that.
2a. Q announced that earnings would not grow 'as fast' this quarter due to seasonal slowdown
3. CDMA sub growth was only up 9M in last quarter to a total of 50M which was only 15M greater than what all the experts had predicted at the beginning of 1999.
4. China deal announced that CDMA WOULD be deployed in China this year, but that only 10M new subscribers could be counted on for 2000. Only 40M by 2002.
5. Successful testing of new MSM5000 chip and 1XRTT software means that at best, QCOM will deliver IS-2000 on time. Unfortunately, this 156kbps data will only be 2 years ahead of GSM (Edge's) 115kbps solution.
6. well, I think that's all the bad news.
Going forward, there certainly isn't much to look forward to either:
Even though Sony and QCOM got out of CDMA HS business (54% of ENTIRE CDMA market a year ago, Nokia's CDMA market percentage remained flat at 10%. Chances are that they will stick with their proprietary baseband because their low battery life, expensive, bad quality phones are sure to keep that 10% moving forward. Nokia is always happier to stay constant with regard to market share so I doubt they will switch anytime soon.
2. HDR, much like CDMA, is most likely just a bunch of window dressing so I doubt if we will hear about any major carrier committments this year.
3. Selling the HS division will most likely mean less revenue, even if earnings increase.
4. Pretty sure that CDMA growth will stop in its track this quarter. I would count on 5M new subscribers every quarter for the next five years. The rate of replacement phones will decrease with every 'bleitery' phone that Nokia floods the market with. In short, wireless may not be the future.....People don't use the internet as much as they used to and by 2003, the US Postal Service will see its rebirth.
So, although many people buy quality stocks for the long run, two months is indeed a long time, look ahead to a day when I can buy a stock and expect that holding it for a short time, say an hour or so, should yield me a fortune. If not..........well, that company must not be worth much. After all, don't they report hourly earnings in about six minutes?
- TRJ |
