My price target @ $71 is nothing more than a passing observation. $65 was resistance on the last rally that stalled when the NASDAQ fell into the Black Hole. I would expect QCOM to easily retest $65 following the FED change in interest rates this week and maybe take a stab into the $70's.
I didn't intend to sell QCOM @ 65 nor do I intend to sell if it goes to $71. I'm into this stock for the long haul. The visibility for 3G CDMA is going to be a powerful catalyst for QCOM once the chipsets for infrastructure and new handsets gain visibility in the second half of the year.
There are so many positives for QCOM's chipset and royalty business. People have completely abandoned their long term game plan for holding this stock. As more cars, trucks, planes, handsets, laptops, smart phones, pda's, etc... become CDMA - based, all of the contracts that QCOM has been signing for the past 2 years are going to start delivering significant revenue opportunities.
The great stall in telecom is a complete headfake as far as CDMA is concerned. You have 70 million current customers that will be replacing handsets - not to mention upgrades to existing CDMAONE infrastructure. This does not begin to account for the expansion of the GSM market into WCDMA and 1XRTT as migration pathways to 3G.
If CDMA only doubles it's share of the global wireless market in the next 5 years, the annual shipment of ASIC's will grow from 90 million this year to 300 or 400 million units by 2006. Ultimately, 3G CDMA is expected to account for 100% of all handsets. I certainly don't want to miss the action.
If you want more projects to consider, you have China Unicom, WLL in India, iDEN conversion in the US, and unnamed opportunities in Mexico and South America. The big difference between QCOM today and a year ago is that we are no longer discussing potential. The bids for these contracts are beginning to be awarded. Next week's auction in China is an excellent example. QCOM and CDMA will particpate in China - not to mention other companies like Lucent, Motorola, Nortel, and a list of others that have royalty bearing contracts with QCOM, as well as a growing demand for chipsets to build out the base stations and handset orders.
Despite the WCDMA controversy revolving around the shortage of GPRS handsets, the opportunity for WCDMA revenues is getting closer by the day. The risk of looking at the gruesome chart patterns for the NASDAQ and QCOM has nothing to do with the fundamentals for CDMA. |
