Anybody got an opinion on QCOM as a further short? It's always had a bumpy ride, and sold off in a big way last week. It's been in the low forties a couple times during the past year, and now is sitting at 50 7/8 after cresting at around 70. The troubles in Korea have been blamed for the sell-off, but they are now facing real competition for the CDMA handset business for the first time. Margins and share are set to drop precipitously, and pricing pressure for network usage is likely to limit growth much more than analysts predict. Their manufacturing business has never been in the black, and although dual-mode phones are likely to be a hit, the days of CDMA monopoly are gone. The company has gotten $100 million/quarter from royalties from other manufacturers, but now the Korean market growth is likely to stall no matter what happens going forward, so although it will be a source of cheap phones and dollar royalties from their export market, the total income from there will be a lot less. Also, the build-out of domestic CDMA markets is slowing dramatically, which means the infrastructure market and royalties will contract. They've taken equity stakes in several overseas wireless franchises, providing financing as well. With economic growth contracting in developing markets, those business plans are not as rosy either.
Can this one be ridden down further? |
