WSJ Article
Slime is as slime does.
I was interviewed for the story. During the interview I explained concisely and with much detail that Qualcomm's Korean royalties and ASIC sales are a function of BOTH DOMESTIC handset consumption and EXPORT sales, with the latter becoming progressively more important. I pointed out that the domestic Korean market, with its very high CDMA penetration rate, was expected to mature this year in any event. In contrast, Korean EXPORT sales, to markets worldwide, continue to be very robust and this demand will continue to drive Korean royalties and ASIC demand.
Moving beyond Korea, I discussed developments in other markets. For example, I pointed out that Japan's CDMA subscriber growth has been dramatic; exceeding 800,000 subscribers in April alone. That would put Japan's April take-rates at or near the peak subscriber rate EVER achieved inside Korea, i.e. Christmas 1997. The WSJ reporter neglected to mention such offsets, and instead chose to publish a sensational, inaccurate and misleading story, suggesting that the current situation has parallels to February of 1998.
In my mind, the WSJ reporter deliberately obfuscated the facts. Since I have been hearing the "short story" about Korea for about a week now, I can only assume that the shorts bought themselves a reporter and created themselves a story. Good work boys...
I find it profoundly disappointing that the WSJ chose to be so cavalier with its purported analysis. I find it hard to be charitable since I explained the Korean business model to the reporter...so he understood the economics and the relatively inconsequential implications of a domestic slowdown in Korean subscriber growth. Even if he disagreed with my conclusion, he should have offered some balance, i.e. that export sales 'may' mitigate the impact OR that other markets like Japan 'may' pick up the slack. His absolute failure to offer any mitigating comments, other than a token quote from me at the end, suggest pretty clearly that there was an agenda at work here.
Finally, it is amusing to see T Rowe Price's Chip Morris quoted in the article. According to Bloomberg's Technimetrics, the Chipper SOLD 99% of his 1.386mm share position in Qualcomm during the DECEMBER quarter....right before the huge run-up. Having cost his clients something around $200mm through his clever analysis, the Chipper now wants to blame Qualcomm management for inadequate disclosure. Chip...can you say "cognitive dissonance"????
This too will pass. All the best everyone,
Gregg |
