>>Can you provide the following re Qualcomm potential revenue sources.
I wish I could, but I can't. Robert Scott (Post # 1387) indicates the basis of his estimation of revenues and margins. Royalties have been guessed at by analysts and indicated in some posts.
Like you, I would like to get my hands on cost center detail. Instead, I do a combination of top-down, bottom-up, kludge analysis. For lack of detail, I try to error on the conservative side when making projections. For example, my FY 1997 estimates are exactly in line with most analysts, with revenues up nicely but not sensationally. I feel there is very little downside to my FY 1997 estimates, but there is plenty of room for a significant upside surprise. Why? Because historical company operating figures do not reflect much experience with either subscriber or infrastructure unit royalties. The limited subscriber royalties follows from the small number of CDMA subscribers as of September 1996 - represented almost entirely by Asia (Korea and Hong Kong) at that time. While license agreements with would-be infrastructure manufacturers no doubt brought in significant income in FY 1996, royalty bearing unit sales of infrastructure equipment probably was quite low, lower even than the number of units produced due to acceptance testing as an extra condition of accruing sales.
This will all change in FY 1997, but by how much? To get a feeling about possibilities, look at what happened to Asian revenues from FY 1994 to FY 1996. They increased nicely from $33 million in FY 1994 to $43 million in FY 1995. But they exploded to $221 million in FY 1996. What happened? I don't know, but isn't it an interesting coincidence that CDMA roll-outs got going only in Asia in FY 1996. What does this portend for FY 1997 with roll-outs all over the US and other places, and the subscriber population going through the roof?
A related interesting fact is that royalty income goes straight to pre-tax income, unlike all other revenue. Thus, EPS is extremely sensitive to errors in estimating royalty income. As a result, if royalty income explodes along with all the roll-outs, there is room for an extremely positive upside in earnings estimates for FY 1997 and beyond.
Allen |
