The limitations of Nextel, GSM and other non-CDMA systems notwithstanding, we are now in a period of capital shortages where service providers will do everything they can to AVOID upgrading to CDMA or any other system. Thus, the future near term earnings outlook for QUALCOMM is more limited now than was a month ago, before the stock markets took another dip.
In a perfectly rational world, service providers would eagerly switch to a system that is more efficient, less costly, with less spectrum requirements than competing systems. This is anything but a perfect world. With political influence mixed in with purportedly rational business decisions, the result is bad for QUALCOMM. In a similar light, I believe the prospects in China are much worse than the numerous news releases suggest. China is making all the right announcements about increasing CDMA services but meanwhile it is signing big contracts with GSM firms.
It's very much analogous to the competition in video camcorders between those using VHS and Sony, pushing its 8mm beta, which, from the performance and convenience point of view, was a better system. But it didn't catch on very well, and that is what I now believe the future for QUALCOMM will resemble: Q will remain a first class technology relegated to a minor role in worldwide wireless telecommunications as a result of a combination of political and other influences on governments, corporations, and individuals.
Art |
