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No. of Recommendations: 25
The only argument I can see against QCOM is the unlikely potential of another technology usurping CDMA.

CBSMarketWatch reported this morning:

South Korea's two mobile telecommunication leaders, SK Telecom (SKM: news, msgs) and Korea FreeTel, an affiliate of Korea Telecom (KTC: news, msgs), said Friday they plan to use Qualcomm competitors' W-CDMA (Wideband Code Division Multiple Access) technology for their new cell phone networks if awarded licenses from the government.


Ummm, W-CDMA is CDMA and Q's patents cover this. All this does is create the uncertainty of whether or not Q, as it claims, will receive the same royalty rate and whether Q will retain its chip dominance. In my mind, in Gorilla parlance, it is a current non-event other than to put the exclamation on the fact that CDMA is 3G and Q is CDMA.

As I have argued before, stock price movement is not a Gorilla indicator. Its like saying the stock market crash of 1929 caused the Great Depression. No, the bad economy caused by tightening money supply, trade wars, etc., caused the Great Depression. As a Gorilla investor look at the underlying fundamentals. If W-CDMA is material (in your opinion) then act accordingly. But if W-CDMA is immaterial than take advantage of any stock price weakness. Non-fundamental stock poundings, in my experience, are the single best source of extraordinary stock returns in the world. Just in the last month I'e doubled on BRCM, nearly doubled on GMST, NTAP, RNWK, and am now on a good run with AMCC. The dropping stock price was not consistent with the underlying fundamentals so I pounced.

On the other hand, with Citrix, the stock price drop was consistent with the underlying fundamentals so I did not pounce.

IMHO this W-CDMA scare is not consistent with the Q fundamentals. If you want a LTBH (and I mean it may take a year for this one to recover given the lack of potential catalyst in the foreseeable future) Q is very undervalued based on its potential. Said potential is not materially affected whether or not its W-CDMA or CDMA 2000 as long as it is CDMA.

Tinker

Tinker

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