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These days I don't much see the point of the GSM vs. CDMA bickering to a QCOM shareholder. I also don't much care whether they call it 3GSM or WCDMA, as long as QCOM receives big royalty increases and it's good for my investment. I'm disappointed the CDMA variants through the non-WCDMA 3G versions haven't done better, but the advantages of huge installed GSM base was tough to overcome, and as long as they're growing earnings rapidly and building a good chip business to support what's getting sold in the future, does it matter?
Perfect technical scenario
Qualcomm Inc. (QCOM) --This major telecommunications company that engages in the design, development, manufacture, and marketing of digital wireless products has been in a bull market since August 2002. In July of last year the stock broke from a consolidation followed by a golden cross. New breakouts from reversed head-and-shoulders formations in January and then again yesterday signal that QCOM is probably headed to $58 or higher.
Biocomm, great call, although nothing is guaranteed your reasoning is excellent and you seem to have been somewhat prescient.
pajaso, I'll give you credit. After hundreds of your posts, one was worthwhile. The beartrap analogy was spot on and colorful.
P-p is way too tedious. time to ignore
OT--I interrupt the unseemly pursuit of profit as it is pursued with the exchange of information relating to this investment with a rumination on something much more important in life....
I have been a White Sox fan for a quarter century--which is not an easy thing to be (they have usually been kind of hard to love over the years--hell most in their own city don't even care much about them). Chicago is such a great baseball town, and Sox fans in particular have been deserving given that they don't assault the world with their suffering (Hello Red Sox? Cubs?). I have to say this has been an unbelievable couple of weeks.
Data--does that now make Q an eigenvalue, or eigengrowth stock?
Geld,
excuse my two cents worth
Q is now a very big cap stock, and multi-billion market cap companies are subject to the law of large numbers. I think the upside and downside contricts as they become such large players. The question is, does the risk/reward still look favorable? Based on fundamentals, and how the market now seems to value their future, I think it's good and furthermore stable enough that I'm willing to keep a large chunk of my savings in it along with other relatively safe and promising investments (like Canadian oil and gas trusts, for example). But your more volatile home run chances? Need to look at smaller companies for that.
OT
Shalimar Point in Shalimar (just inland from Ft. Walton Beach) is a great course and very reasonable. Rated one of the top courses in the Southeast.
As long as we're off topic, I'd be happy to host any regular here who loves golf if you happen to be in Kansas City
p-p, you post "nuff said" but then you keep going; why don't you stick with it.
No need to apologize part 2--anybody who followed you in can sell at a nice profit today.
This is like the rule I had with some golf buddies--if you groaned as you hit the shot, but then the ball careens off the rake to six feet from the hole, or ends up in the fairway, you get fined whatever you're betting on the hole!
Rich, I have to reluctantly agree with the village idiot PUNKIN, this trading stuff is hard. I don't think too many of us had Q going up today so strongly after last night's announcement! Both his gloating and Ricardo's gnashing was premature.
No need to apologize Ricardo, you just were putting out what you thought. I don't think they're trying to manipulate the stock, the changing guidance only hurts their credibility so I don't think it's intentional. It's just the way it is when the world's timing is somewhat out of their control, as it is for most everybody else.
I lighten up on the trading action and sell some covered calls when the stock starts acting weak like it did several weeks ago. Almost time to back up the truck though, because bad news is out and the market is lousy, so not much else can batter it down once we get through the reaction to this. A perfect storm, and the Q traditionally rebounds fast after bottoming.
Eric, good info. Thanks for clarifying the current picture. The considerable time and effort put forth by you and Data and Rich and a few other wise men is greatly appreciated by this dilettante trader.
The good news as reflected in your last line is that they're now playing on all-new turf (UMTS in Europe) and it's "found money", although their utter technological domination of conventional CDMA isn't carrying over to the "W" version. And I wish for good products no matter the vendor to increase the royalty pot more quickly.
Khemara--great article--note especially: "instead of complex politicking, QCOM has just gone out and done it". I think that speaks volumes about their future. Others don't "do it" because, in large part, they don't have the engineering to make it work, no matter their expertise in non-wireless or other areas of wireless. Also, I think the pessimism over their potential WCDMA market share provides one of the really strong "investable opportunities" at the current time. I'm no expert but based on the results to date, do they not have a significant lead in chips that actually work? That is where the rubber meets the road.
A quick back and fill will do no harm with a chart as pristine as this. I think the biggest risk is not being long for a year end rally right now--if not the major indexes, at least the leading stocks like the Q.
OT: Strategic Reserve
This is an interesting issue but I think as usual what is reported misses the most salient points. Even if we drilled more oil and the Saudis (if they could) upped production--debatable as I think they are pretty much maxing out--no more oil would make it to market because of the structural issues that occur between drilling and gas pump. Refining capacity is nowhere near demand and won't change for awhile; also a shortage of light crude (mostly what we need, not the Saudi heavy crude), etc. There is maybe a 10-15% speculative bubble on prices but given these other issues that won't go away for a long time, I don't think Bush could make much of a dent in that bubble even with the SPR. So I think he's right on to treat it as a truly strategic asset. Clinton of course would have tapped it anyway because momentary election concerns would always have been paramount--although it worked out well enough last time, it wouldn't do much this time.
Pajaso,
I was noticing the same thing. This is our third time in the 72-73 top area, and I'm selling a few short term calls against my longer term calls, but only a few to hedge, and if we break through look out. I'm unaware of the split having any effect as the chart is still the same but with 1/2 the number
Around here Jim M should just be called CFO.
He nailed the last two quarters
Jim M.--in reading through the SI thread and bumping into your past projections, I also find them uncannily accurate...so 2.30 is OK by me. Henceforth you are called "CFO". Unless it's an inside scoop, in which case you will be henceforth "jailbait" :)
guidance is 1.93-1.98 excl. .07 loss for QSI. Still lots of room to up guidance a few more times this year. Keep your call options ready to fire.......
Jim--thanks for the analysis. Did they up their 4th qtr guidance too? If full year is 1.96 and q3 is .49, then that puts q4 at .43; I'm with you, I don't think so. .70-.80 looks like a stretch though. What is the catalyst for such a huge increase?
Art B's $85 yearend call is looking pretty spot on, if we don't get a big Nas drop. Interesting to see if we can get a big summer run based on upping guidance. Almost sold some cc's today fearing "sell the news"....ahh, my luck isn't quite as bad as it used to be....sweeeeeeet
Jim M., nice post. Question about your business comment--it is a viscous game of hardball.....I am envisioning a baseball immersed in thick, cold motor oil, creating a viscous state that would be much harder to hit than a spitball.....now that would be vicious :)
Kayaker, nice to be on a thread with so much courtesy(s)
And by the way, UTEP got screwed. Nice start to the greatest two days in sports--the opening round
WSJ article, courtesy of John Hayman on SI
EV-DO Technology
May Be Next Big Thing
By ALMAR LATOUR and JESSE DRUCKER
Staff Reporters of THE WALL STREET JOURNAL
March 18, 2004; Page B1
When George Bishop walked out of his dentist's office in San Diego last month, he got a panicked call from a colleague with a massive computer problem.
Mr. Bishop, an information-systems director for a small pharmaceutical company, quickly pulled out his laptop and started working. Within minutes, he gained access to his company's internal system, found the necessary data to solve his colleague's problem and fired off a few e-mails telling a co-worker how to tackle the task.
The trick? Mr. Bishop's laptop -- like those of 28 of his colleagues -- is equipped with a wireless access card linking the machine to his company's network from practically anywhere in the region.
Mr. Bishop says the service, offered by Verizon Wireless at $80 a month, has saved him money on phone and Internet bills at hotels when he travels and has made his work hours more flexible. "If there is a critical issue over lunch, we can actually solve the problem even if we're not at the office," he says.
Mr. Bishop is one just of a few users of the wireless Internet service. But Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, hopes that will change soon. The nation's largest cellular-phone company is investing $1 billion in the coming two years to upgrade its network to enable wireless Internet access at speeds comparable to digital subscriber lines or cable-modem connections. By year's end, the carrier plans to cover roughly one-third of its network with the new technology, according to a person familiar with the matter, making the service available to nearly 80 million people in dozens of cities. The service will expand further in 2005.
Verizon Wireless hopes that the technology, called EV-DO, which stands for "Evolution Data Optimized," will generate new revenue in years to come. The service has been available in metropolitan Washington and San Diego since late last year, using equipment from Lucent Technologies Inc. and Nortel Networks Corp. Verizon Wireless is expected to unveil more details about the rollout at the Cellular Telecommunications and Internet Association trade show next week in Atlanta.
EV-DO is different from Wi-Fi, a wireless technology that mushroomed over the past couple of years. Wi-Fi generally can be used in a radius of up to about 300 feet from a transmission station, or "hot spot," which in turn is linked to an existing landline network. Wi-Fi is featured at many coffee shops and fast-food restaurants around the country, as well as in many people's offices and living rooms.
By contrast, EV-DO can provide a longer, wider range coverage of wireless access to the Web over a cellular network and offers an average data speed of 300-500 kilobits per second. It even could be used by a passenger in a moving car or train.
But EV-DO technology has its drawbacks. Because it relies on cellphone networks, EV-DO won't work in "dead spots" where a regular cellphone signal is weak, including deep inside some buildings. And in places where Verizon Wireless service depends on "roaming" agreements with other cellular providers, users may have to settle for a slower connection, using older data-transmission technology. In most cases, EV-DO wouldn't be a practical replacement for conventional wired Internet connections such as DSL or cable modems.
Most major wireless carriers in Europe and Asia, where sending and receiving data on cellphones is far more popular, also have experienced hiccups in rolling out similar services. In the U.K., Sweden and Italy, a wireless operator called 3, which is controlled by Hutchison Whampoa Ltd., features handsets with large color screens, video-conferencing capabilities and services such as downloadable video clips. But battery life on the handsets is so short that it's impractical for serious users at this point.
Still, some analysts say the impact of EV-DO in the U.S. could be significant. "The best thing that can happen is that this really is the beginning of wireless data as we hoped and envisioned it, because until now wireless data has been a barely satisfactory event at best," says Roger Entner, a wireless analyst at Yankee Group, a technology consulting firm in Boston. "With EV-DO, the network is definitely not the problem anymore."
The price of the service, geared to business users, is expected to drop as more sign up. Subscribers tap into the technology by plugging a special card into their laptops. Equipped with a miniantenna, the card connects the laptop to Verizon Wireless's network and establishes an Internet connection.
Later this year, Verizon Wireless also expects to roll out consumer applications based on the technology, and to offer EV-DO personal-digital assistants and cellphones. Possible services could include gaming, downloadable video and music clips, and news services. The carrier eventually expects consumer services to make up a significant part of EV-DO revenue.
Verizon Wireless isn't the only company trying to bring faster wireless Internet service to the masses. AT&T Wireless Services Inc. last year launched "Edge," which offers wireless access to the Internet in most areas where it has cellphone service, though at slower speeds than EV-DO.
Other wireless Internet services in the U.S. include the so-called Vision service from Sprint Corp., which has speeds comparable with a dial-up connection. And Nextel Communications Inc. is testing a technology called "Flash OFDM," which promises even faster speeds than EV-DO, equaling that of a high-speed Internet line called a T-1.
Verizon Wireless has higher hopes for EV-DO than it does for Wi-Fi, but that doesn't mean Verizon and other phone companies are abandoning their Wi-Fi plans. Since last year Verizon has installed some 500 hot spots, many of which are converted phone booths around Manhattan through which Verizon DSL customers can access the Internet free of additional charge. While that helps Verizon keep customers on its network, the falling price of Wi-Fi equipment is making it easier for smaller competitors to poach its customers.
One competitor to EV-DO are so-called hot zones, or large areas such as office buildings or university campuses that have multiple Wi-Fi stations, allowing seamless wireless access to the Web and even wireless voice calls over the Internet connection.
What's more, small wireless Internet-service providers are using variants of Wi-Fi, or various proprietary technologies, to provide wireless Internet access with ranges of several miles. That could become an even bigger threat for big cellular carriers like Verizon Wireless when a new long-range wireless standard known as WiMax becomes available, expected later this year.
Write to Almar Latour at almar.latour@wsj.com and Jesse Drucker at jesse.drucker@wsj.com
Question for DRox or any other kind well informed wireless junkie
Just read a recommendation on an investment based on WIMAX future growth. The high data speeds, range of towers, agreed upon standards, Intel's involvement with chip development, etc. suggest a potent technology a few years out that may have major 3g ramifications. Is this perceived as a competitive or complementary tech or a little of both? How do you see this affecting Q's growth potential; TIA
Mindy--good question after a terrific earnings report. I think the market largely expects upside surprises from Q, but more importantly we were overdue for some consolidation. We're well extended over the moving averages, and there is some "selling the news". Also downside overall on the Nasdaq.
Watch the $60 level. On the multiyear charts you see it was support for a long time until it was breached, then it was resistance. I think there is still alot of supply around that level. If after a consolidation we break $60 solidly on good volume, then watch out--I think $80 could be achieved quicker than anyone thinks.
$60 is very significant for QCOM; it formed support for a long time and resistance afterwards. It would seem to be pretty meaningful overhead resistance with nothing else of significance until 80. I can't imaging it getting taken out on the first try, but I've been surprised plenty lately.
Replying here because I am too cheap to pay for SI, I wouldn't think the market would find the EV-DO news that big a deal, at least we all knew this was inevitable. I think this pop is due maybe a little to the good (but inevitable) news, but more to Nokia and the last bit of Nasdaq momentum until we reach peak oversold condition.
But the real reason, of course, is that for the first time in a while I chose to cover my trading shares at $55.....often a prelude to a big run, you're all welcome......
As AWEful as they are, it's still hard to believe they had a capacity problem when you consider that only a fraction of the expected overall volume of number switching occurred.
That's more like it! Prepare for analyst upgrades across the board as they raise 04 estimates. I expect they will raise them again as we get further along into the year.
Ironair, they neglected to mention that the "strong interest" was most likely exclusively within Nokia....
seriously I'd expect a few inquiries from any handset supplier preparing to negotiate costs with the Q
Rich, it is extremely satisfying to see the analyst reports get the reactions they are undoubtedly worth....
I haven't seen anything to explain the rally after looking, but I'll take it
Then again they don't have to raise their numbers because Q didn't raise guidance. This guidance is conservative to the point of worst case scenario, no Unicom 1x, minimal India growth. Guess we'll have to wait for them to raise the numbers gradually
If there was a runup today, I would expect a "sell the news" reaction tomorrow, but with the pullback yesterday I think we could have a nice bounce on improved guidance. Analysts will have to revise upwards after tonight.
I like your W.A.I. but we'll see QCOM $50 first. Which I won't mind
JM,thanks and nice post, I knew you'd have a good analysis handy since you've done some pretty extensive modelling for '04 already.
I'm not too worried about chipset encroachment or even price reduction from the TI/Nok deal; for a long time I think that will be Nok phones only and not strong competition. In regards to the technical competition to Q in CDMA, I'm from Missouri (actually I am but you know what I mean!). I don't even wish Nok ill; I've been rooting for them to put out the kind of cool phones they're known for in CDMA because I figure they'll expand the market.
What is exciting is that so much of Q's upside in '04 is not discussed or priced in....as this becomes more clear to the street, we could have a pretty impressive rally. I'm slowly preparing.
Enough of this on a Sunday, but then the Chiefs don't play till later....
It's interesting that GSM1x gets no attention in analyst writeups I've seen, but just Unicom (not to mention potential demand from other carriers) could produce meaningful revenues. This could be the most significant development not discounted into the stock price today.
Jim M. or anyone, any calculations on the size of a potential upside to earnings from this in 2004?
Look at Mindy's "Wireless Breakout" and click on the link. Yesterday we had a strong up day well through $40 resistance on twice the recent average daily volume. This is very encouraging--however with volume being so low in the market overall lately (what I referred to as "doldrums"), it's not as meaningful as it would otherwise be. Still--with the news flow looking to be excellent for the next several months and analysts still with low expectations for 2004, I would think we have some great upside--more like $60 as the next major barrier in the next 4-5 months.
Stock action is rarely discussed here; discussion is totally dominated by news and operational business activities. I'd welcome more technical price discussion because I am only trying to make some money here (not saying I don't appreciate the operations experts, because the education has given me the patience to wait for the market to catch up to the fundamentals). The stock price never seems to react much to news, more to occasional fud and the overall market.
So for what it's worth, 40 was a big resistance area and with good volume today this qualifies as a meaningful breakout--some big money is moving in. Hard to say how meaningful though because the overall August doldrums are still the backdrop--this isn't big volume any other time of year. But hey, we'll take what we can get, right?