Skip Paul:
I don't recall saying that QC was overvalued. I suggested that understanding the company's new intrinsic worth requires something more than a hyperbolic extrapolation to a large number. As a professional investor, I am always concerned when a portfolio position triples in three months. I would rather see consistent appreciation, sustainable over years, rather than a bubble straightline up, accelerated by every double-digit IQ with a mouse and Internet access.
I said that Qualcomm's business model now combines Microsoft-like elements (CDMA royalties ~ Windows sell-through) and Intel-like elements (ASIC ~ Pentiums). Again, hyperbole is no substitute for research. How big is the royalty opportunity? What is a fair net present value? How long past 2010 can the royalty stream be sustained? How big can the ASIC franchise get? How many different wireless applications can and will be enabled by CDMA, and to what extent can QC's ASIC group supply the brain for such applications? Will 3G create an opportunity for a number of new and creative PDQ-type devices? Shouldn't these 3G devices command far higher prices than 'commodity' handsets and therefore provide an important accelerant to both the handset division and royalties? What is the potential for WirelessKnowledge? Most Street analysts acknowledge its existence; few have anything intelligent to say about it.
These questions, and many others, require careful consideration and much research. What we know is that, despite a few uninformed naysayers, the digital wireless standards battle has been won by CDMA. This victory was a seminal event for Qualcomm and substantiates most, if not all, of the recent appreciation. All I said in my prior post is that I find it necessary to examine the next derivative carefully before opining. My 'gut' gives me really big numbers; my brain requires documentation of the same.
Best regards,
Gregg |
