hey, Eric..
ya, i agree that this new initiative will be major competition for BREW. That's why I think it's so important for Qualcomm to switch as many carriers to CDMA2000 than WCDMA. It'll be interesting to see what happens. 1x and BREW should have a 6 month lead before the GSM Cabal catches up in the US and certain parts of Europe and Asia.. I think the fact that CDMA has been a strong spot for wireless has helped Qualcomm get more support. Lucent saying they'll only focus on CDMA and Ericsson awhile back coming out and saying they'll also focus more on CDMA. This goes to show that buying any company before the tornado is important, because it is the tornado that makes the value chain drop everything else and support the leader. That's why Bea needs a tornado so companies will drop what their doing and ride the growth that Weblogic would be going through.
If Qualcomm is able to get a commanding share in the GSM/WCDMA ASIC market then BREW may have a better chance at penetrating GSM/WCDMA carriers.
We'll see what happens. Qualcomm is a very innovative company and my respect grows every day when you consider what they've done. Their WCDMA chips work and Qualcomm won't have to pay any royalties to GSM IP holders so they should be able to undercut any WCDMA ASIC companies, no?
One problem Qualcomm will face is to get the carriers to support BREW (the GSM carriers that is). How can Qualcomm get around this? I could easily see Samsung or LG Electronics selling their phones to AT&T WCDMA subscribers, but i doubt we'd see AT&T support BREW. Maybe, Qualcomm could by pass the carriers and let the users download the applications directly from Qualcomm over the internet? That way qualcomm doesn't need the support of the carriers and could possibly keep more of the profits for themselves or give it to the developers.
i sort of agree with you that these cos are cyclical. the problem i would have with that argument, though, is that blue-chip tech cos are not priced like cyclicals; they're priced like growth stocks. the easiest way to get a handle on that is the price to sales ratio. e.g., widely recognized cyclicals like autos will often trade at 1x sales or significantly less than that (GM is well under 0.5x sales last i checked). in contrast, many tech stocks are trading at 8 to 15 times sales. this does not look like cyclical trough valuations to me.
techs are much more profitable than autos, no? auto companies need to have quite a bit of extra cash in case of emergencies whereas tech companies don't. i also think some tech companies could lay off more works and boost their eps, but chose not to and just break even..
nevertheless, i think many people want to believe tech is cheap now and if one bought today and held for the next 7 years they'd make money. If you can't provide a convincing argument as to why tech stocks provide value at today's levels then we shouldn't buy.
matter of fact, one could argue that technology provides less value than it did 10 years ago because everyone is chasing and looking for the next msft and intc. No one is interested in some of the wonderful business that have nothing to do with technology. there are many great companies in boring industries which receive much cheaper multiples than technology stocks.. |
