Ramsey, the purpose of the aforementioned exercise was to provide perspective amidst all the current concern about Q2 earnings. My perspective is fundamentally that of a value investor. Throughout my career, my most economically successful stocks have been technology companies purchased at a material discount to intrinsic value. Simply put, the Street, and most tech investors, are extremely bi-polar towards technology--loving companies beyond all reason when things are good and vice-versa when pot-holes arise. Economic value, proxied by market position, intellectual property rights, royalty streams and hard won technology advantage, tends to be far less ephemeral than next quarter's earnings per share.
Do I think QC is vulnerable? Yes. Poison pills, and other corporate governance defenses, simply require a potential acquirer to negotiate in good faith with the Board. In and of themselves, they do not prevent a transaction. Furthermore, QC's blocking position with respect to W-CDMA puts several large European telecom companies in a very difficult position. Do I hope for a transaction? No, I think an acquisition of QC at this juncture would be tragic both for the company and its shareholders. We have come awfully far, in a remarkably short period of time, so I would hate to see people be short-term greedy and long-term dumb. The importance of South Korea, from a domestic subscriber standpoint, is a rear-view mirror issue--as I've said repeatedly before, the rest of the world (U.S., Japan, China, India, Canada etc.) is the issue for 1998 and beyond. Investors are failing to grasp the difference between subscriber growth risks INSIDE Korea and export opportunities for Korean telecom companies (Samsung, LG Electronics etc.) OUTSIDE Korea--not to mention all the foreign exchange rate and handset pricing implications (e.g. royalties on Samsung handsets sold in the U.S. are not impacted by the won's decline because the transactions are dollar denominated) and so forth.
Bottom line, as an investor, I philosophically differ from many on this page. Fixated on the three-to-five year timeframe, I am largely indifferent to the market's short-term vicissitudes, and would not consider trading out of my holdings simply to avoid a near-term mark-to-market decline. In my mind, the risk of being out of the stock, and failing to reestablish my position were the price to suddenly increase, dwarfs any concern over near-term volatility. Based on my analysis, QC is an accreting asset, trading at something near fifty cents on the dollar (as demonstrated in my prior post). Stock prices fluctuate in the short-term, and that provides opportunities for traders like Candle stick, which is fine. But, IMHO, significant wealth is most often created by investors focusing on long-term corporate value creation rather than traders looking to scalp a buck or two off the top.
Best regards,
GJP |
