Sue,
I realize you don't like to post, but I wonder if I could twist your arm enough to convince you to be more specific about the concerns expressed in that article.
An investor has to really be able to read in between the lines and keep up with the news about Qualcomm when evaluating articles such as that one.
Example #1:
"Leading brokerage firms have lowered their market share estimates for Qualcomm. Merrill Lynch [MER] estimates Qualcomm's share of the CDMA chip market will drop from 90% in 1999 to 50% by 2003."
Yep. They sure did. That's because they got that guidance from Qualcomm mangement. Whereas the novice reader could infer from the article that this is new news, it's really very old news. And isn't that what Gorilladom is all about, controlling 50% of a huge, world-wide consumer-based market? If that's a problem, controlling "only" 50% of it, that's a problem most companies would die for despite the fact that we can cite a few examples of greater control in other industries.
Example #2:
"For example, Ericsson and Motorola, among others, are developing rival technologies in an attempt to neutralize
Qualcomm's ability to leverage its patent to secure high royalties..."
The operative words in that sentence are critically important. It says those companies are "developing" technologies, not that they have developed technologies. It also says that they are doing that in an "attempt" to minimize payment to Qualcomm, not that they have become succesful in doing so.
Example #3: "... only 40 million of the 220 million units sold in 1999 used the CDMA platform, representing less than 20% of the available market."
Most people objectively assessing that would write that it's absolutely amazing that CDMA has already captured 20% of that market in such a short period of time.
Example #4: " 'Qualcomm will not get rich off of Ericsson,' says Ericsson spokesperson Kathy Egan."
There was also an Ericsson CEO who said CDMA would never work. The truth is that if Qualcomm does ever become rich off of Ericsson, Qualcomm management would have the class never to admit it. That's not the kind of thing a class act publicly throws in the face of a major partner.
Perhaps most important is that you are wondering if the critical elements in the article address characteristics of Gorillas. In my mind, the article's primary points had to do with trying to justify certain analysts' assumptions and thus the valuation of the stock. Valuation of the stock and characteristics of gorillahood have little in common.
Hope this helps. I hope others respond.
--Mike Buckley |
