FriendsA lot has been said about QCOM's recent hit. Whether the cause relates to WCDMA, China, Korea, Nokia etc, I imagine that as a Gorilla (albiet a baby) this company should be able withstand the recent FUD. At prices in the 60 dollar range, Gorilla Gamers, I would also imagine, should be snapping up shares like there is no tomorrow. Unless something fundamental has changed about this company, QCOM looks very attractive. Any thoughts?Michael
At prices in the 60 dollar range, Gorilla Gamers, I would also imagine, should be snapping up shares like there is no tomorrow. Unless something fundamental has changed about this company, QCOM looks very attractive. Any thoughts?Yes, I have a thought: either I am really, really smart or really, really stupid. I have been adding to QCOM during the recent slide and have done so with the knowledge that it very well might continue to go lower based upon its IBD accumulation/distribution rating of E, the fact that it is still in a downtrend, and the fact that volume is much higher on down days than it is on up days. The bottom line is that institutions are dumping QCOM. A little voice inside of me keeps saying before each buy, "don't do it." On the other hand, all this "news" strikes me as nothing more than FUD. The transition to 3G in China is inevitable and CDMA is the only game in town; 2G in China would have been nice, but it was not factored into current estimates anyway.In the GG case study on CSCO, there is a 50% drop in 1994 after CSCO missed earnings (this is from memory, but I am pretty sure it is close). This is the only point in the CSCO game where more funds were added from external sources as opposed to from re-investing the proceeds from a basket of another game won by CSCO.Here, QCOM's drop has not been caused by anything as drastic as missing earnings. Instead, there has been some arguably bad news relating to China and, most recently, one analyst who has always been bearish on QCOM lowered his price target. In short, there is nothing relating to the technology adoption life cycle that tells me that QCOM is not a gorilla worth holding for the long term. Since the GG is premised on the market underpricing the gorilla, I choose to add more at these levels even though the market is telling me not to do so. Time will tell is this turns out to be a big mistake.
I've taken a gander at Q lately to see if there has been any fundamental change to the story. My conclusion is both good and bad. The good is no. The bad is yes.Here is the conundrum: GSM is a fine technology and it is the embedded standard. CDMA is a finer technology and due to its properties which make both greater technological and economic sense to the vendors (ie, CDMA scales so much nicer and its data capacities are so much greater) that the world should some day switch to CDMA and CDMA will rule the world.So that is the good.The bad is however, that it doesn't seem like this will happen tomorrow. The greater optimists were predicting CDMA to push GSM out of the way in a matter of a few years and continue to eat into GMS market share. Reality seems to be that this is not necessarily happening. That for the next year or two anyways, that GSM will remain the embedded standard. And it may take even longer. The key to watch is when traffic volume and data capacity demand becomes so great that GSM operators experience pain. Sufficient pain to force them to switch the CDMA. At what point this will happen is not clear, but it appears that this point may be pushed out 3 to 5 years.Result of this, Q will eventually become what all expect, and will probably bring in all the earnings we all expect. Unfortunately, it may take a few years longer to get there than many were hoping. This means that future revenues need to be discounted further to account for the increased time value of money. VIOLA: QCOM is now worth less.Some of the price drop no doubt is do to FUD. Some of it may be due to this perception I have described above.But that is my quick Q analysis.CONCLUSION: Those holding Q for the decade need not fret.Those holding Q for the next 6 months to year or 2 may want to fret. Of course this is all based on perception and perception can change in the blink of an eye.Tinker
P.S. to my last message. The other major perception factor is that Q claims that they will retain the same royalty rate irrespective of which version of 3G becomes standard.It just doesn't seem likely. It all depends on how well the IP claims of other companies stand-up, but it does appear that W-CDMA or is it CDMA2000 or whichever one (I can't keep these acronyms straight) has a more diluted IP base. Result, it is unlikely, and not credible that a company which controls nearly 100% of current CDMA standard will be able to command the same royalty rate if it only holds 50% of the IP for the next standard. I think this perception is also currently built into the stock price. And I, and no one else, has any definitive answers to any of these questions, and the Street hates uncertainty with a passion.Tinker
At prices in the 60 dollar range, Gorilla Gamers, I would also imagine, should be snapping up shares like there is no tomorrow. I am trying to snap them up. Only problem is my broker says he needs to be paid for them :-)At any rate, I have managed to bring my costs down to about $72. Would like more but have nothing I want to sell.Craig.
That for the next year or two anyways, that GSM will remain the embedded standard. And it may take even longer. The key to watch is when traffic volume and data capacity demand becomes so great that GSM operators experience pain. Sufficient pain to force them to switch the CDMA. At what point this will happen is not clear, but it appears that this point may be pushed out 3 to 5 years.I agree with your premiss, however, 3-5 years is a LONG time when it comes to tech changes. Wireless demands I think will grow faster than any of us think.Craig.
Tinker,The other major perception factor is that Q claims that they will retain the same royalty rate irrespective of which version of 3G becomes standard.It just doesn't seem likely. It all depends on how well the IP claims of other companies stand-up, but it does appear that W-CDMA or is it CDMA2000 or whichever one (I can't keep these acronyms straight) has a more diluted IP base. W-CDMA is not a 3G product. Heck, it's not even a 2G product. When Qualcomm says they weill retain the same royalty rate regardless of which version of 3G becomes standard, I think the assumption is that CDMA2000 has already been declared to be part of the standard but there will be two other non-CDMA parts as well. Because the specs have not been written for 3G yet, Qualcomm can't begin shipping product. Therefore, Qualcomm doesn't know what the exact standard is. But it will include CDMA2000.That's how I understand it anyhow.As for the optimists you mentioned who thought CDMA was going to push GSM out of the way in two or three years, those people didn't understand the what has and hasn't been decided. It was totally unrealistic to expect that.In your study of the good and the bad, where does HDR fit in? You didn't mention it.--Mike Buckley
In your study of the good and the bad, where does HDR fit in? You didn't mention it.Study still on-going. In general it will change the world. Still need to evaluate commercial potential of W-OFDM which appears to be a superior technology at least from a pure performance level - have to figure out its commercial mobile viability (this damn 28.8 kb dial-up modem I'm stuck with for the summer doesn't help (the reason I haven't been on SI very often lately).My true opinion regarding Q (not Qwest) but THE Q, is that the perception is wrong for the most part. W-CDMA will be more profitable than anyone realized even if Q does get a lower royalty rate. But that the faster data speeds become and the more dense the traffic, the greater and greater becomes Q's hand and dominance.The variable here is when will this technology start to roll-out en masse. We don't know. 2001, 2002, 2003, it is up to Q to develop the technology, bring it to market cost-effectively and push it out so fast that the Nokias of the world who still can't do 1G CDMA will never be able to keep up with 3G and will have no choice but to buy from Q or lose the market. And this time Q's earning growth won't be waited down by the handset division nor changing business model.TinkerP.S. No current Q position. Sold for tax purposes on Jan 2 to buy some RMBS LEAPS (the Q sale timing was pure chance and tax timing - would not have sold except I needed to raise some money quick to get RMBS LEAPS) so will be looking at it closely with intent to buy it back once I cut through the FUD and answer these very questions.
Tinker,We agree about the basics of Qualcomm. Thanks for your response about HDR.--Mike Buckley
Good post concerning MCOM's Ricochet2 vs. 3G.http://boards.fool.com/Message.asp?id=1190244001705000&sort=postdateI'm an MCOM shareholder since September/October last year, but I think Ricochet2 will remain a niche product. Analyses of the technology vs. 1XRTT/HDR/GPRS/WCDMA is accurate though, IMHO.
W-CDMA is not a 3G product. Heck, it's not even a 2G product.WCDMA is standardized under IMT-2000 as IMT-DS; that means it's an official 3G standard. On the other hand, HDR is not.I posted this on "THE N" board:http://boards.fool.com/Message.asp?id=1190244001660001&sort=usernameSpecifically,<<As for third generation systems, there are really five flavors, as defined by the International Telecommunications Union (ITU) as part of the IMT-2000 standard:- IMT-DS Direct Spread (formerly known as WCDMA)- IMT-MC Multi Carrier (formerly known as cdma2000)- IMT-TC Time-Code- IMT-SC Single Carrier- IMT-FT Frequency TimeThe first two are based on CDMA, IMT-TC is a combination of CDMA and TDMA, IMT-SC is TDMA, and IMT-FT is a combination of TDMA and FDMA.>>You can get all the standards specifications and working papers from ITU's website:http://www.itu.int/imt/2_rad_devt/index.htmlAs for the optimists you mentioned who thought CDMA was going to push GSM out of the way in two or three years, those people didn't understand the what has and hasn't been decided. It was totally unrealistic to expect that.I don't read Gilder much, but I remember him saying along those lines. Yes, I know, he doesn't work for "THE Q," and he doesn't give investment advice.
This is my first post to this board, although I have been lurking for some time now. I had not seen this PR from QCOM on the thread so I thought I would post it on this thread, although I have posted it elsewhere. I have not read the GG books so I thoguht it best to just lurk, but hopefully this PR is of help. I have not read the past 100 posts as I have been out of the loop for few weeks. My apologies if this PR was posted in that time frame.Disclosure: Bought first shares of QCOM in November of 1998 and have added four times since then and will most likely continue to do so. My time frame is a decade at the minimum. I'm willing to wait to see the inevitable happen. When six months ago I read Nokia's PR stating they WOULD be the CDMA market leader I knew the future of my investment was very secure."Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens."Philip FischerHopefully this may help in getting through the recent QCOM FUD.http://biz.yahoo.com/bw/000608/ca_qualcom.htmlCompany Press ReleaseQUALCOMM Expects Early Global Deployment of Third-Generation CDMA TechnologyEight Chinese Manufacturers Confirm QUALCOMM's CDMA Intellectual Property Rights AgreementsSAN DIEGO--(BUSINESS WIRE)--June 8, 2000-- QUALCOMM Incorporated (Nasdaq: QCOM - news) issued the following statement clarifying the Company's unique position with respect to its Code Division Multiple Access (CDMA) intellectual property rights and the deployment of third-generation (3G) systems. QUALCOMM welcomes the worldwide resources that are being devoted to roll out third-generation CDMA technology, including Multi-Carrier (cdma2000(TM) 1xMC and HDR in 1.25 MHz bandwidth, and 3xMC in 5 MHz bandwidth) and Direct Spread (WCDMA in 5 MHz bandwidth). QUALCOMM owns a substantial portfolio of CDMA patents, including many ``essential' patents that are necessary for the deployment of any proposed 3G CDMA system, such as Multi-Carrier, Direct Spread, and another system referred to as TD-SCDMA. QUALCOMM has now granted royalty bearing licenses to more than 75 manufacturers for CDMA and, as part of these licenses, has transferred technology and know-how in assisting these companies to develop and deploy CDMA products. A significant number of these companies' licenses cover third-generation applications, including WCDMA, 1x and High Data Rate (HDR). Under terms of QUALCOMM's existing 3G licensing agreements, a licensee will pay the same royalty to QUALCOMM for 3G systems, including WCDMA, TD-SCDMA and 1x, as that licensee pays QUALCOMM for today's CDMA infrastructure, phones and test equipment. QUALCOMM will aggressively enforce its patent rights around the world and unlicensed companies that supply products for 3G CDMA systems, such as WCDMA, as well as companies that use such products from an unlicensed supplier will be infringing QUALCOMM's patents. QUALCOMM expects to charge the same royalty rates for all third-generation products as it does for 2G (IS-95A), 2.5G (IS-95B) and 3G CDMA 1x, but, because terms and conditions may change over time, QUALCOMM has reserved the right to adjust its license terms and conditions, including increasing its royalties, for those companies that delay in entering into a license with QUALCOMM. The Company expects that 1x will be the world's first commercial third-generation wireless technology, initially in use by the end of this year and widely available in 2001. Because of its high spectral efficiency and limited bandwidth requirement, both cdmaOne(TM) and non-CDMA operators can easily transition to 1x, achieving increased network capacity, higher quality and the ability to offer high-speed wireless Internet access sooner while supporting existing and new users. QUALCOMM believes that a great advantage is gained by early entry with CDMA and that it would be wasteful to pour billions of dollars into non-CDMA technology that will be shortly outdated. QUALCOMM understands that China Unicom is considering the deployment of CDMA 1x and possibly HDR for 3G. Such a deployment of third-generation technology in standard CDMA bandwidth would provide greater capabilities than achieved by a later adoption of wider bandwidth WCDMA and ensure that consumers enjoy the benefits of CDMA one to two years sooner. The Company welcomes the eight domestic Chinese manufacturers to date that have signed CDMA intellectual property research and development agreements, under which QUALCOMM will provide chipsets and system software, and relevant documentation required for CDMA research and development. QUALCOMM will work closely with these manufacturers to develop CDMA-based wireless communications technology for China. These agreements allow the manufacturers to develop handset and base station prototypes based on IS-95 A/B and 1x standards. The manufacturers have the option to secure commercial licenses at any time during the terms of their R&D agreements. Regards,Robert
With regards to HDR and the like but maybe slightly off topicI have recently been in wide ranging discussions with a large customer about the network he wants for his new building.One thing he was looking at was mobility - the ability for a user to walk around the building and be connected anywhere. He was obviously thinking of some kind if wireless building. However we did some sums here and determined that even 802.11a (30Mbps short range) would be a problem if we also started to do some of the other cool things that were wanted (such as Video Conferencing) because that 30Mbps would have to be shared between many (20-30) users. It was quickly determined that inside an office 1Mbps per user PC was going to be considered a retrograde step.However we did look at mobility for PDAs and the like and attempted to estimate the bandwidth requirements for them. The applications clearly are less demanding - calendar syncing / stock quote checking / email - so the bandwidth requirements are less. In addition you can share the b/w amongst many users because these applications will tend to be extremely bursty with lots of think time between periods of high traffic. While the bandwidth needs are going to be hard to determine the critical need is that the b/w be sharable between a large number of end users.I don't know enough about HDR or any of the other wireless data technologies (except for a little bit on bluetooth and 802.11 LAN) but I think this large number of users sharing bandwidth will be even more important for public networks so probably you need to find the network technology that does this the best.DD
tlchiam,The following part of my post you responded to was misleading.W-CDMA is not a 3G product. Heck, it's not even a 2G product.What I meant by that is that it's not a product currently being adopted by end users.I'm not going to get in a discussion with you about what Gilder did or didn't say about Qualcomm pushing GSM out of the way in two years until you offer hard evidence about what you think he said.Regarding your point that HDR is not a 3G standard, you're right of course. Qualcomm considers it a band-aid solution of sorts that will help migration to 3G.--Mike Buckley
Pardon neophyte's dumb question, but -- what's FUD? Thanks.
Courtesy of HiHo on the Yahoo BRCD board:http://messages.yahoo.com/bbs?.mm=FN&action=m&board=21750630&tid=brcd&sid=21750630&mid=7894Ready for some ancient tech trivia?FUD = Fear, Uncertainty, and Doubt.This acronym comes from IBM in the late 1960's and 1970's. At that time, IBM was the 800lb gorilla, selling 360-series mainframes. IBM's Sr.VP of Marketing/Sales at that time was "Buck" Rodgers. Because IBM also had a habit of being late introducing new products, many customers were held up implementing new products in their data centers, and, in some cases, had to wait up to two years for new products. IBM had such strong name brand recognition, and a 90% market share in the mainframe market (sound familiar), Buck described his commitment to his customers by saying over and over again, "No one ever gets fired for buying IBM." Seemed to work for the first year, but as product delays got into the second year, Buck made a major change in IBM's culture. He resorted to pre-announcing future products to discourage customers from jumping ship and going with competitors' mainframe products. Buck's approach was described as, "Fear, Uncertainty, and Doubt" because he carefully crafted his future products reputation to outperform any existing competitor products. FUD in it's purest form was a lie about how IBM would beat the competition, and probably resulted in the engineers at IBM having to jump through hoops to try and get the products to perform better than the competitors' latest releases.... :0When you see people today talking about FUD, it's usually because the poster is attempting to describe something that is not public information and is crafted to discredit a competitor.hiho
Pardon neophyte's dumb question, but -- what's FUD? ThanksFUD: Fear, Uncertainty and Doubt...Pete
Thanks for the most enlightening response to question re: FUD
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