laodeng,
while Mark Roberts has addressed some of the issues, I think he is missing the bigger picture.
It was not that long ago that we were crying about the FUD. Now the FUD camp is falling apart. This is so positive that we should be jumping for joy.
"QCOM WARNED", that was the headline. If anyone bothered to give it a second thought, what follows should make us giddy. QCOM warned the GSM - WCDMA camp that they are no where close to delivering what they promised. The best part about this warning is - THERE IS NO DISAGREEMENT.
The next moves are very important. I have previously opined that China somehow ended up in a very eviable position. In order for 3G to succeed, every player has to cooperate. This includes the government, the carriers, the vendors. China is unique because the Chinese government is still the majority owner of all three sectors. Furthermore, they are going to have the largest wireless growth rate for the foreseeable future.
For those in denial, sometimes it requires being hit over the head by a 2x4 before they are willing to face reality. The current telecom wreck is that 2x4.
What do you think will happen next?
1) UK and Germany would most likely need to renegotiate their 3G spectrum with the successful bidders, or face outright default or causing their major telecom providers into bankruptcy.
2) The EU carriers need to rethink their 3G migration path. I am sure they realize that 2G to 3G not only have the intermediate step of 2.5G, there are probably 2.6, 2.7, 2.8 and 2.9Gs. They have placed all their faith on the BS aka GPRS and EDGE. They have already lost their once their world leading position in wirelss to the US, Korean, Japanese and soon the Chinese. Even if they turn the Titanic around today, I opine that it is already too late. They will be playing catch up. All it takes is ONE major European carrier to switch to the 1x camp and the war is over.
3) For all the carriers all over the world who are undecided, how many do you think will be choosing WCDMA now?
4) Finally, evidenced by the wireless sub rates in Asia during the Asian contagion, wireless growth is not significantly affected by economic conditions. Again, the Europeans are going to be hurt the most not because of the economy, but because of their high penetration AND no new products in the horizon which will entice the current subs to upgrade. We all know where the sub growth will come from in the CDMA camp.
Another major piece of information is the way that QCOM's earnings are now posted on Yahoo and all the normal sources where most of the Joe6packs go look. If the proforma is not used, it does appear QC got a PE higher than the moon. Do you think we can rely on the wisdom of Maria Bartomomo to explain to the viewers that QC's reall PE is much lower?
So when the ignorant investors hear the word WARNING, take a quick look at the PE on Yahoo, and immediately hit the panic sell button with no understanding of the facts.
I would be shocked if QC management is not editing next week's presentation right now to clear up some of the above.
Ramsey |
