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 Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: matherandlowell who wrote (91164)	4/25/2010 11:13:16 PM
From: waitwatchwander	4 Recommendations Read Replies (3) \| Respond to of 197214

Engineer always talked about the game being to expand the pie and Qualcomm would get it's fair share. Take a look at this graph. It was put together for a different purpose but serves for examining his expanding pie theory. Up until the Nokia affair (April 2006) the stars did seem to be aligned. At that point, the market continued forward (units and revenue) but royalties got held up. Most of this was recovered in the 2008 Nokia and Samsung deals. Then the economy tanked along with the expiry of the basic power and rake receiver patents. Around the time of the Nokia affair, Apple appeared on the scene and has steadily moved forward ever since. What I see in this graphic is the industry moving forward with a piece of the royalty pie having been removed. You are right that the market is poised for another run but it will be with Qualcomm collecting a smaller piece of the pie. Our decline on that front is tied up with the arrival of Apple (see blue slice). They are todays winner and we have struggled to remain competitive. That's what slacker and the market sees. Is that all about to be turned around by Qualcomm management with Gobi, SnapDragon and Mirasol? Given their successes - continuous delay and numerous costly ($200M+) backtracks over the last 5 years, that's become a tough call. The pie is growing but our chunk appears to be shrinking and maybe even at a faster rate than overall market growth. There is nothing encouraging in that 30,000 foot view. I expect cdma units to grow at +25% per year topping out well above 1 billion units per year. Royalty revenues are now growing at 1/2 that rate and decline on that front got started with the arrival of Apple. Current trends are not our friend and they need to be broken. With Microsoft and Google coming on board with similar business models to that of Apple (ie OS software separation coupled with ODM manufacture), our portion of the pie may continue to shrink. Hearing how wonderful the industry is doing while we flounder about is most discouraging. If they screw up SnapTrap, the rest won't matter. The $4+ billion spent on repositioning the company and tripling the army is nothing but water under the bridge. All that matters now is the frandly future that they may or may not have bought. Is it the best or the worst that is yet to come?