re: "How is a debt burdened, over inventoried, over regulated industry going to get the cash to buy equipment for QCOM to earn royalties?"
You ask the critical question for QCOM, and for the entire telecom industry.
Lots of investors in QCOM would rather talk about the geeky details of the technology. This is more fun. It is also irrelevant, in the current situation.
The downside risk for QCOM stock, today, is the financing issue.
It's pretty apparent, that the telecom service providers (everywhere, not just Europe) don't have the cash flow to do the 3G buildout, and can't borrow the money, and the stock market isn't buying any equity offerings.
Saying, "the equip vendors will provide financing", doesn't solve the problem. Ultimately, the infrastructure has to be paid for by the end-consumers of telecom services. The rest of the supply chain feeds on them, just like plankton (at the bottom of the food chain) ultimately feeds all life in the ocean. When the plankton decrease, the top predators starve. When revenues to telecom service companies are insufficient to service debt and invest in new markets, then QCOM's future profits are in danger. The "starvation" has already moved along the supply chain, with equip companies like LU recently having trouble establishing a credit line.
The "build it and they will come" attitude is now over in telecom. |
