What many people here seem to ignore is that Qcom has rejected the Rmbs type business model.
Yes, its apparently rocks solid patent control of the implementation of a key new technology gives it a similar royalty based earnings opportunity from a similarly huge sea of adopters.
But Qcom has elected to be a broadly based wireless manufacturer, rather than a IP royalty house. The IP royalties do constitute a vital cash cow, along with the Omnitracs business.
The decision to build handsets and infrastructure, as well as to own cellular systems (to enhance the infra. business), presents the possibilites of a much higher potential upside. It also greatly enhances the risks.
So far Qcom has not proven itself to be a sufficiently capable manufacturer, given the competition it faces (outside of Motorola, of course), to convince the Street. They were starting to do so, then muffed it (again) last quarter.
All the attention on 3G CDMA standards, and whether Ericy will have to concede IP primacy, and on how fast the march towards CDMA adoption primacy will proceed, is, in my view, missing the point. All that would be spot on if Qcom limited itself to a Rmbs business model, but it hasn't. And has the costs to prove it.
The key to Qcom's stock price is how its ability as a manufacturer proves out. You know, margins and volumes. Perceptions of manufacturing quality.
All this CDMA sytem engineering stuff is seeing the tree and not the forest. IMHO.
Doug |
