Earnings Fears Not 3G causing price slump.
The reason for the decline in the stock price is that the shorts are hearing from Qualcomm suppliers that the business of the suppliers is down. Therefore, the shorts are speculating that Qualcomm's earnings will be reduced and that Qcom may pre-announce that it won't meet 1st quarter targets and maybe for next quarter or so, too. Note, the decline in the stock price has been going on for some time. Qualcomm did not appear at the last two meetings of either analysts or brokers--can't remember the names. It has little, if anything, to do with the 3G. The shorts, the traders know there is a lack of confidence and understanding in the stock, and so they can drive the price down.
Remember 3rd quarter or last quarter. Almost the same thing happened. There were rumors that suppliers' businesses were down and that Qcom's revenues and income would suffer. It proved false, since the company may have found other suppliers.
Positives. Japan may have gotten off to a slow start, there are 500,000 cdma subscribers in Japan right now. There is a rumor that Nokia will contract with Qualcomm to second source the ASIC's for Nokia's new, high-end phones. For those on the thread who have commented how great Nokia is at marketing phones, that is good news: Qcom gets a double whammy on every Nokia phone for which it will supply the chipset. Since Nokia's handset business seems to be really taking off, that is only good for Qualcomm if it supplies the chipsets--and they will be in the better quality phones.
3G: Ericy Blinks. If I understand the ITU press release correctly, the standards board is simply going to take off the table making a decision on wide band--that is, it won't adopt Ericy's W-CDMA, nor will it adopt cdma2000. It simply won't decide. That leaves things to the competitive market, allows the court in Marshall, Texas to decide the IPR issue, and is not at all bad for Qualcomm. Cdma players continue to forge ahead on 3G. The Ericy offer of 3.8 on the chipset rate is a cave in. Go back over the thread and look at the press releases from the past. The GSM players flatly stated, among other things, that any reduction from the 4.09 chip rate would "degrade" w-cdma and cause the price to go up and would be totally unacceptable. Gilder categorized the campaign as trumping up a negotiating position. Now, Ericy goes to the 3.8 rate, which has nothing to recommend it but forcing all platforms to make changes in the chip rate even though cdmaOne had a chip rate intentionally chosen in view of the future. That is, cdmaOne systems would be forced to change at 3.8 when they would not be forced to change at the lower rate Qualcomm wants. |
