About Synder from Mot. Fool:
The Motley Fool Discussion Boards
Subject: Analytically Impaired Analysts
Date: 10/21/2000 10:52:16 PM
Number: 18350
Author: Lokicious
URL: boards.fool.com
As a scholar, used to making and evaluating analytical arguments, I am
intrigued by the influence of self-important, investment so-called
"analysts" who strut their ignorance of real analysis in the media and
cause such angst for honest fools. There are certainly contributors to
this board who are competent at analysis and many quality analysts working
on Wall Street and for serious business publications, but as in most
things, the intelligent tend to be quiet and cautious.
Let us take Mr. Snyder's latest comments about Qualcomm and Nokia. When
I look at analysis, I first want to know whether the author or speaker
knows enough about the subject to be taken seriously. (Acknowledged
novices are the exception, since they sometimes raise important questions
experts don't think to ask.) Anyone following Qualcomm knows by now the
difference between Qualcomm as holder of CDMA patents and Spinco as
manufacturer of CDMA chips, and knows that Spinco is shortly to be spun
off. Mr. Snyder either does not know this or glosses over it, which
completely destroys his credibility.
The central question is how might Nokia's successful production of CDMA
chips affect Qualcomm. A competent analyst would immediately break this
down into separate questions of the affect on Qualcomm as the patent
holder and the affect on Spinco as the chip manufacturer.
Analytically speaking, if Nokia makes its own CDMA chips instead of
buying them from Spinco, Spinco will have a smaller market share of CDMA
chip production. To conclude that Nokia's chip making would be
detrimental to Spinco, a competent analyst would have to counter the
argument that Nokia's move towards CDMA will accelerate overall use of
CDMA and so increase the total need for CDMA chips to such as extent
Spinco will end up making a lot more chips and money than otherwise. If
current Qualcomm share value were based on the assumption that Spinco will
have a monopoly on CDMA chips after a great increase in CDMA use, then
Nokia producing its own chips would indeed have a negative impact on
Qualcomm investors. But then Mr. Snyder needs to make that specific case.
Mr. Snyder continues to imply, though he never says it, that Nokia will
be doing CDMA without license from Qualcomm. Unless he has new
information on the patent issue, which he is obligated to provide, he is
simply spouting the same kind of unsubstantiated nonsense as the bashers.
Nokia's manufacture of CDMA chips may put it in competition with Spinco,
but not with Qualcomm as the patent holder, so Nokia's move towards CDMA
presumably means more money for Qualcomm the patent holder.
Finally, true analysts must be skeptical of their sources and share this
skepticism with their audiences. We know Nokia has failed in the past
with CDMA chips. Maybe it has now succeeded, though it will need a
license from Qualcomm, unless proven otherwise. A competent analyst must
point to these previous failures, demand convincing documentation of
success from Nokia, and take a wait-and-see attitude.
If Mr. Snyder turned in his piece to me as a freshman paper, I might give
him a C. As a senior, he would get an F. I'm afraid this is true of far
too much of what gets passed off as analysis for investors. But let us
not forget that people who spend their time as hypsters on day time soaps
are not exactly professors at Wharton (and a lot less interesting or
clever than 15 year-old con artists). |
