Clark, re 3) The earnings surprise was apparently caused by the sale of some investments. This is not sustainable.
Not so. The $.06 gain on sale of investments was largely offset by onetime charges, one of which was share of investee losses attributed to Ukraine [which is planned to be spun off to LWIN].
The margin improvements are real, Clark. As for your beef about sales growth, I believe it really is a mix of business issue
(ie. infrastructure way down, ASICS way up in units but flat in $ due to pricing, and handsets way, way up).
Royalties and Lic fees - the year ago quarter included at least 2 up front license payments that are mentioned in the Jan 1998 release, whereas this year I believe the license number is nil or negligible. If those year ago up fronts were 4 or 5 mil each (WAG on my part) then the Y/Y growth looks pretty good, particularly considering you have to figure in a PLANNED 20% annual pricing erosion on both ASICs and handsets. Also see my comments at the bottom of my post on CC notes regarding hints that Q may have under-accrued for royalties in the current quarter.
In my view it was a great quarter. Handsets business is fixed and operating at 20%+ margin. New models and manuf lines means they will be even more efficiently manufactured in the 2nd half. ASIC's at 5 MM for the quarter and more than 20 customers already for the new MSM3000 (which will likely carry higher ASP's initially). Infrastructure still a drag but management very determined to lower the breakeven and stop the bleeding. Omnitracs at 269000 installed vs 229000 last year = 17.5% growth in mature market with huge market share and expanding opportunities. WK ready for carrier trials now and market launch in March/April. Subscriber growth coming from US,Can,Mex (TJ launch soon),Chile, Brazil, Australia (soon), Japan, Korea, HK, China (hinted at NEAR TERM opportunity). All this vs just Korea and US/Can last year. 3G is going our way and it is just a matter of time before Q will be selling to cdma subs worldwide, including Europe. Oops, don't forget Harvey White and his sneak attack on the Baby Bells.
The fun has just begun.
PS. I know you of all people don't really need this pep talk, but I couldn't resist.
Best regards,
Jim |
