"The performance post Sr. Jacobs has been abysmal. QCOM could have hired many people and accomplished the same end results to date... Jr. Jacobs just rode a trend that Sr. established and that's it... There has been no real experience / contribution to take this company to the next level.
In the end, the problem is not with QUALCOMM or its management. The problem lies squarely with the shareholders for tolerating this situation."
I love this thread. I guess I love it in small doses. It is great because it is a forum in which otherwise uninvolved people can share their thoughts about something on which none of us is truly an authority. In fact, I think it is clear that no one on the board actually gets paid for their investment opinions (perhaps Jeffrey does-- but those would not be on the subject of QCOM).
Anyway this discussion is starting to remind me of that old Bob Uecker commercial for Miller Lite. You will remember that Uecker (the old catcher for the Brewers who later became overwhelming successful as an announcer, actor, comedian, and baseball personality) was being thrown out of his seat by an usher. And Uecker says: "I must be in the front row." Later, after the commercial pushes the beer, we see that Uecker has actually been relocated to the far right field bleachers-- way out there where columns obstruct the view of the field. But here's the part I love: as we leave the commercial we hear Uecker, from the right field bleachers comment on a play at home plate-- surely more than 350 feet away-- "he missed the tag," Uecker yells, "he missed the tag."
A certain frustration has welled up among long time QCOM shareholders. I am sympathetic to that frustration. The stock was in the 30's five years ago. It was in the 30's when the company had $5 billion in total revenues and much less cash on the books. It was in the 30's when there was serious litigation pending and arguments about the validity of the business model or the fairness of the one company owning a lock on an entire industry. It was in the 30's when BREW was just being developed, when FLO was still just an idea, when Mirasol had not been named, when Snapdragon was yet unborn. At that time the price to sales ratio was on the order of 12 or 14. The stock was valued as a technology play. So what's happened? The stock will probably do $12 billion in revenues this year ( you heard it first right here). There are so many good things about to happen that we have trouble focusing on a single one. After years of waiting for 3G to sweep over the world, it is now happening. And all those little developments that Paul worked on, nursed into existence, nurtured when others would have wanted a financial payout, are about to be commercially realized. But because stock analysts don't quite understand the patent portfolio, because accountants can't quite understand the ASP metric, the price of the stock is ridiculously low. So rather than long term holders of the stock saying "humm... the stock now has more cash on the books than ever before, more prospects of rapid growth than ever before, more licenses than ever before, more 3G subscribers than ever before, and yet it is selling at an all time low price to sales ration-- it might be a good time to double down," we have long term holders of the stock calling out for a change in the management.
"He missed the call. He missed the call."
Paul has forgotten more about the physics of uplink and back haul than most of us will ever know. While we might think BREW has some kind of future, how many of us really know how it fits into the ecosystem of the so called value chain? Can we really say that FLO, a technology almost no one here is in a position to evaluate, is really irrelevant to the future of the company? Forget the physics. How many people have run companies at this level? How many of us have run companies of at this level in this field? At best, we are bunch of guys trying to see the plate from about a 100 yards away.
I'm not criticizing anyone for second guessing management. The arm chair quarterback (alluded to by a different author in an earlier post) is well within my skill set. But I wouldn't take myself so seriously as to say that Paul doesn't know what he's doing. It would border on the pathological.
We all have a choice to make. If you think that QCOM is hopelessly mired in the muck of eroding ASP's, sell some stock. If you really think the stock is worth $25 a share, short the stock. If you are sure of it, put your entire 401K on the line. Last year, when educated commentators thought that there was a reasonable chance of a world wide banking failure, the stock sold in the mid 30's. Now, after hoarding cash and preparing for major product launches in an improving global economy, perhaps QCOM should be valued in the 20's. Maybe not. Maybe this is just the darkness before the dawn. Maybe the voices calling for you to give up hope on the Q have some other agenda in mind. We can't really know. But that's what makes a horse race. Think 3G is over? Think that all those Chinese people will have no use for text messaging? Do you really think that no on will want to watch sports events on their cellphones while they are waiting for their wives to finish shopping? Sell. Sell now. Judging by that Barron's article, there will likely be many investors lining up to take your stock off your hands. But if you think that writing off QCOM is a little premature, you might want to wait just a little bit longer. We could fire all the guys in the company who have a technical understanding of the physics of the business. I think Apple did that for a while. But then they brought back in a guy who knew something about computers.
Et tu, Brutus?
j. |
