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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.

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