<<the thing is, i believe it's hard to say in advance how the cards will play out for QCOM if the industry experiences extreme difficulties (one might say that is already starting to happen). >>
Market now realizes that 3G is in trouble. Market has known this for at least two years, just soon after Euro companies collectively dropped $140B for 3g spectrum. This subject was thoroughly discussed here, and everybody was in consensus at that time that 3G in Europe was in jeopardy, and it would not happen until the companies could find a way to pay for it, and they would be broke.
<<i believe the share price (high PSR) is discounting a considerable and fast move into 3G, which may not materialize on schedule if carriers have funding difficulties.>>
You are wrong on this. The market discounted a considerable and fast move into 3G back in 1999. Since then the market realized the disaster in the Euro land, and its impact on QCOM since they would be all 3G customers of QCOM.
<<QCOM trades at a price-to-sales premium to just about any wireless company >> You are right, and should be that way. QCOM will always have a higher price-to-sales than its customers, because of the nature of the relationship that exists. Converse is also true imo. As soon as 3G got into trouble, QCOM got whacked. As sson as China rollout got botched, QCOM got whacked. as soon as Korean handset subsidy was banned, QCOM got whacked, and we see in the last 6 - 8 months, Sprint and VZ dilly dallying, and price got whacked more and more. The effect of any good or bad news on QCOM's stock price will always be much more amplified than expected.
At teh moment, the market thinks everything that could go wrong for this company has already gone wrong, and the stock price has been whacked accordingly. Remember, the market always knows best, learns the news fastest and makes the adjustments immediately. |
