Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: qveauriche who wrote (76509)	7/13/2000 11:37:12 AM
From: Wyätt Gwyön	Respond to of 152472

qveauriche, Let me preface this by saying that I appreciate very much your cordial reply... would you at least agree that the foreordained ascendancy of WCDMA as the "world" standard is subject to some uncertainties itself? Sure. Nothing's certain till it happens. I'm just talking about what the odds are. Earlier (last year?), Jacobs talked about a 30/70 market-share split between cdma2000 and WCDMA for 3G. The market seems to have handicapped that outcome significantly (sorry to mix phetamors <g>). You enumerate a number of "What if's?". I think some of them could come true. You could make arguments for or against. And people who know much more than you and I have had those arguments and come out on both sides of the fence. The main thrust for pro-Q is anticipated technological superiority. The main thrust for pro-GSM/UMTS is entrenched market, huge economies of scale, etc. My guess is that the real outcome may be somewhere in between. But my point, really, is not to say that none of those things can happen. Those exciting possibilities for QCOM are part of the booster fuel that made the stock the greatest performing S&P500 stock ever last year. As a result, the stock got very expensive and increasingly needed to maintain the "good news" filter in the public perception of future prospects. But now we are in the aftermath of that great party last year. In addition to the momentum blowout, the Q has suffered setbacks this year in China, as well as questions about the forward growth rate in CDMA subscribers due to high penetration in Korea coupled with the handset-subsidies prohibition, and questions regarding cdma2000 adoption among what were considered stalwart allies in Asia. But, perversely, IMHO the "bad news" is actually "good news" for prospective investors, since the stock price has deflated and one is able to buy in with much less downside risk. I am not saying none of the good possibilities you mention will not happen, or that bad things to the GSM crowd cannot happen. Rather, the nice thing now is that one can buy in without having to pay that "dreamium" for those possibilities. If they happen, and if QCOM becomes the next CSCO and hits $600 in three years as some hope, then so much the better. But even if that doesn't happen, one can anticipate the stock and company holding its own at these levels.* BTW, of the possibilities you listed, the one I consider the most promising is that QCOM will still be a significant net beneficiary of WCDMA royalties. I don't think the net will be close to 5%, at least for the big players like NOK and ERICY, but they should still make good money. * That is why I said: At the point where an investor is paying only for the current cash flows on a reasonable level, China/cdma2000/WCDMA royalties/blahblahblah can be thought of as free call options on the future.