wave rob and all the doonmsayers--QCOM is no longer a net add story. With the advent of 1X its a handset replacement story.PCS is conservatively giving guidance based upon what it can see about existing sales, all of which are just plain old 2g sales. Given news in the US about 1X's popularity in Asia, I think a dramatic slowdown in net adds in a market that remains relatively unsaturated may hold interesting possibilities for 1X. Would you have run out and bought a brand new black and white TV in June of 1963 if you knew that by August the color models will be out?
I think we can all agree on one thing. The US 1X rollouts have become enormously important; to 1X's prestige worldwide, and perhaps even to the survival of PCS.
News that the 2g business blows these days does not really concern me since I do not consider it to be an indicator of demand for the higher-speed phones, or the ability within that segment of the market for 1X to distance itself from the competition.
So far, 1X is batting 1000. We can write off Japan to unique cultural factors if we like, but there was clearly something about FOMA the Japanese didn't like, and clearly something about 1X that they do like.
In any case, back when there was no KDDI 1X, when FOMA was really sucking wind in Japan, doomsayers had no problem concluding that FOMA's cool reception strongly indicated the lack of demand for 3G worldwide. One wonders where all of those unique Japanese cultural qualities were back then. I also wonder what the odds would have been that the Buy Range bears would have been writing off the significance of it had KDDI's 1X rollout had fallen flat on its face. I'm trying to imagine my buddy rob coming to the Q's defense ,assuring us that Japan is no test case for the rest of the world.
So lets be realistic about where we are. QCOM growth is absolutely dependant upon 1X growth. 2g gag stories, even among cdma carriers, may temporarily impact earnings in the 1X transition stage, but is not a reason to bail on this stock. There was nothing in Merrill's downgrades today which was based at all on any indication that 1x in the US would not go well. I agree that 1X success will become more meaningful as it is experienced among a wider variety of cultural demographics than simply Korea or Japan. But 2 for 2 is still 2 for 2. And thats pretty impressive when you consider all of the WCDMA and GPRS flops around the world. Also, can we think of even a single electronic gadget that has caught on in Japan that did not also catch on in the US? I can't. What is the rationale behind the view that 1X will be the very first? In more than 50 years of consumer electronics. |
