Ramsey & Limtex: to expatiate on some earlier thoughts. QC's business portfolio is comprised of Omnitracs, license & royalties, ASICs, infrastructure, handsets, Eudora and, for lack of a better term, a venture capital portfolio (i.e. Globalstar & start-up system operators).
I stand by my comment of a $500bb value for Omnitracs and my $180mm value for Globalstar (sorry Valueman, but I'm reading the partnership documented differently from you).
In the panic over Korea, people seem to be missing that QC royalty stream extends years into the future and will shortly be derived from more than 38 countries. Yes, Korea came up first. Yes, Korea's domestic market was very important to QC's P&L during FY97. But as 1998 progresses it will be about the U.S. (Sprint, PrimeCo and all the 800MHZ carriers), Japan, Canada and a plethora of other countries. Try this exercise. Create a spreadsheet with all the geographies with current, or immediately pending, CDMA networks. Then assume a baseline penetration rate--say 1% of the covered pops--over a twelve month period. Add up the incremental subsribers. This will help you understand how the royalty and revenue dynamic will change over the next twelve months.
Harvey White noted on the Thursday call that "most of the Japanese" have selected QC's chipset for their soon-to-be announced handsets. Now tell me, isn't the population of Japan a little bigger than that of South Korea? In the hysteria, people are making it sound like QC's business is forever dependent on one little Asia country. However, as I said before, chipset sales will be flat quarter-over-quarter and total revenues will be flat to up slightly from December's $785mm level--despite the Korean setback, this is NOT a meltdown.
The infrastructure business is building backlog, primarily in wireless local loop. Chilisat is moving along nicely (did we forget that QC is building out a national PCS system in Chile?). People also seem to have forgotten about Globalstar. QC is building the terrestrial gateways plus subscriber equipment. It's amazing that QC is the technological lynchpin for Globalstar, yet its marketcap is barely double that of GSTRF. Oh well, Globalstar isn't being held accountable for quarterly earnings yet.
What's the point? The stock may trade lower, or it may recover directly, or it may go nowhere for a while. So what? The economic underpinnings have developed substantial inertia. Korean royalties are a component of, but certainly not the key to, the company's future. Understand what you own; understand why you own it. Good luck. |
