Seems JPM disagrees with Louis and MS on whether the Sprint- Nextel combo is “priced into” the Q’s EPS / value. Further, it appears that JPM is only considering the impact from handset sales in ’07. QChat revenue should be kicking in also from the combined / potential 39 million subs.
DR / Rich (anyone)-
1. Could not Nextel’s transitioning to Sprint’s newly upgraded EV-DO network happen early in 2006 (or before) , providing a QCOM EPS boost for handset sales before ’07?
2. Any guesses on how long it would take to get backwards compatible (iDEN + CDMA) handsets on the shelves?
3. Would not these iDEN + CDMA handsets most likely “all” contain a QCOM chipset?
08:43 QCOM Qualcomm: Sprint-Nextel combo positive for QCOM -- JP Morgan (43.30 )
JP Morgan out positive on QCOM, as they believe the Sprint/Nextel combo could add $0.07 to QCOM's annual EPS beginning roughly in '07, assuming Nextel's 15 mln subscribers only gradually migrate to CDMA on a usual upgrade schedule rather than all in one fell swoop. If they were to migrate all at once, the EPS impact in the first year of the merger could be double that. The $0.07 est assumes that Nextel's 15 mln subs add an incremental 10 mln CDMA handsets/year generating $312 mln in total incremental rev to QCOM. A Nextel/Sprint combination aside, firm remains very constructive on the QCOM story and stock. With QCOM's recent chip wins at NEC and Siemens and their better understanding of the WCDMA royalty structure, firm believes the near-term fluctuations in chip sales and handset shipments are far outweighed by the consistency and momentum of the overall business. Reiterates Overweight.
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