The Qualcomm potential investment in Reliance seems to me to be by far the best of these efforts, yet they haven't completed it. Why not?
1) Is the investment not really as good as it seems? Are there problems with Reliance that Q is privy to that we are not?
2) Is the deal worked out by Q & R not being adhered to somehow. Is Reliance not buying the right, or enough CDMA product? Are they not buying it from the right vendors? Are they buying non-CDMA products at the same time, sapping to an extent their CDMA push?
3) Has Qualcomm decided that the purpose of the proposed investment, i.e., to spur the development in CDMA in new countries and geographies is already working well in India, and the money would be better spent elsewhere?
4) Does Qualcomm have a need for the money, and even if an investment of $200 Million in Reliance would be excellent, they are no longer in a position to do it?
Inquiring minds want to know. What do you guys think?
My take, with big holes:
#4 seems the least likely. Q is doing well, with plenty of cash in the bank, and both sales and profits growing at a good clip. To my way of thinking, this option would only be true if they were about to buy something or someone. Again, not likely.
#3 seems unlikely as well, though more based on gut feel than anything else. It does appear to me that Reliance WiLL bring CDMA to the masses in India with or without the $200M from Q, but Q has integrity, and I can't see them backing out for that reason alone.
#1 could be true. I don't know the financial reporting laws in India, but Reliance's plan is hyper-aggressive and maybe Q saw some assumptions built into the plan that they just couldn't live with. With how they've executed so far though, it seems to me that Reliance is going to deliver on all they say. "India Reliance Infocomm's Break-Even In 1st Yr Possible"
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was a recent headline that further backs up this hypothesis.
#2 stands out as the one explanation I could think of that has some evidence to support it. One source said "Qualcomm had desisted from making the investment due some alleged delays in the implementation of the Infocomm project, as had been agreed upon between the two earlier."
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It seems hard to believe though, that over a year ago, when this investment was first being discussed, that the plan agreed to was even more aggressive than the one being executed. That leaves me with the story about corDECT, which I still don't fully understand.
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If Reliance is indeed building a large chuck of their WiLL business on corDECT, I can see why Qualcomm would get miffed and hold back funds. But is that what's really going on? And if it is, why is it going on? Is corDECT better than CDMA WiLL in towns and villages? Is Reliance only doing corDECT in locations where they began doing so before their commitment to CDMA? If that's true Q should have known about it before thinking of investing $200M, so why cold feet now? |
