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IMHO Qualcomm made another subtle business move by selling their CMDA module business to Sierra Wireless.  A similar move to the selling their CMDA infrastructure business to Ericsson.  In both cases, Qualcomm unloaded a low margin business and retained the high margin licensing and royalty arrangements.  Despite the buzz about Nokia, Ericsson, CMDA, GMS, China, and now Korea, financially, Qualcomm is subtly different.

Gross Margin MRQ
Qualcomm     51.8%
Nokia        38.6%
Ericsson     41.3%

Net Margin   MRQ
Qualcomm     27.5%
Nokia        13.6%
Ericsson      7.2%

Cash King Margin MRQ
Qualcomm     30.3%
Nokia         9.3%
Ericsson    -14.0%

But, Qualcomm's finacnes aren't impeccable.  Their flow ratio last quarter was a whopping 3.44.  Almost double the popular Nokia's 1.38.  CMDA speculation aside, Qualcomm seems to know where profits lie.  However, in order to maintain this business advantage, Qualcomm must continually innovate and patent.  It is discouraging that R&D as a percentage of sales and as a percentage increase have both fallen below 10% year over year.
     
I've made about every mistake the Motley Fool has warned against.  The Foolish Four used to be a part of my portfolio.  When it came time to sell Goodyear, my position had worsened.  Instead of selling, I chased it on the way down to reduce my cost basis.  I also erred in buying Qualcomm during the hype without fully knowing the company.  Burned once on buying a falling stock, I vowed not to make any decisions without information.  That forced me to watch the price plummet from my original purchase price.  However, sometimes mistakes turn into good fortune.  After reading the financials, the discussion boards, and the industry reports, I have decided to treat it as a Tweener and continue to add to my buy and hold position until there is a good reason to sell.

Go Twins even if they can't fool on

Aame  
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