Publisher's Note: Ãƒâ€šÃ‚Â
If you're someone based in Europe or who follows the European wireless market, I have some good news: Today we launched a new, Europe-focused edition of FierceWireless. The new publication, called FierceWireless:Europe, will cover the European wireless industry on a twice-weekly basis. Sign up is available at www.fiercewireless.com/europe/signup. Ãƒâ€šÃ‚Â
FierceWireless:Europe will be written and edited by our new U.K.-based correspondent, Paul Rasmussen. Paul has been writing about mobile communications for more than 12 years, and we are thrilled to add him to our team. You may see his coverage in this publication from time to time.Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â
We at FierceMarkets are particularly excited about FierceWireless:Europe. It's our first-ever international edition, and we have high hopes and expectations. Ãƒâ€šÃ‚Â -JeffÃƒâ€šÃ‚Â
p.s. Here are some useful links related to the new publication: Ãƒâ€šÃ‚Â
Email sign-up:Ãƒâ€šÃ‚Â www.fiercewireless.com/europe/signupÃƒâ€šÃ‚Â
Press releases: send to [email protected]
Advertising opportunities:Ãƒâ€šÃ‚Â contact [email protected] or call +1 202-628-8778 x 18
Are Qualcomm's fundamentals beginning to crack?
Back in August I wrote about Qualcomm's remarkable ability to weather all of its bad publicity surrounding patent disputes because investors saw that its fundamentals remained solid. Three months later, investors are beginning to worry as the CDMA licensor and chip maker lowered its profit expectations for fiscal year 2008 by as much as 30 cents a share. The reduction comes because Qualcomm excluded royalty payments from Nokia, whose licensing deal with Qualcomm expired in April when the two couldn't come to an agreement on new terms, when it put its estimate together. Moreover, Qualcomm's legal costs associated with all that patent litigation are mounting. Legal fees during the entire fiscal year topped $200 million, thanks to lawsuits and patenting disputes with Nokia and Broadcom, among others.
On Friday, Qualcomm's stock closed down byÃƒâ€šÃ‚Â $1.66, or 4.2 percent, to $38.10, despite posting an 84-percent jump in net profit for the fourth quarter. Qualcomm CEO Steve Altman said no progress has been made with either Nokia or Broadcom over their respective patent disputes, and it doesn't appear there will be much progress in the near future. It also doesn't help that Nokia is racking up bigger shipments of W-CDMA handsets.
In a note to investors, American Technology Research analyst Mark McKechnie said the firm was surprised by Qualcomm's guidance miss. "Some may view new numbers as conservative, but we believe QCOM is facing some tough legal and competitive issues in W-CDMA, which will linger for the next 2-4 quarters." McKechnie removed its "buy" rating on Qualcomm stock in September, downgrading it to "neutral" on Qualcomm's legal struggles and Motorola's move away from Qualcomm as a heavy 3G chipset supplier.
Still, the vast majority of analysts covering the stock maintain their "buy" ratings. Goldman Sachs once again re-iterated its "buy" rating on the stock, saying the valuations remain attractive even when taking into account Qualcomm's revised projections. The firm believes the current valuation is overly negative and points to factors such as strong W-CDMA sales and wireless data uptake.
But how much time does Qualcomm have to try and maneuver itself out of its patents disputes before investors panic? We are beginning to see cracks in the dam. The company's business may still be solid but the pressure is on as the world's No. 1 handset maker, Nokia, continues to make strong gains in W-CDMA handset sales, despite gaining most of its leading market share from lower cost GSM devices. Meanwhile, Motorola announced in September that it plans to remove Qualcomm from its 3G roadmap in favor of Freescale Semiconductor in the short term and Texas Instruments come mid-2008.
Qualcomm investors have to be hoping that Qualcomm licensee Samsung, which recently overtook Motorola as the world's No. 2 handset maker, will post some big numbers in the 3G handset market. Strategy Analytics recently noted that Samsung is rapidly picking up share in 3G feature phonesÃƒâ€šÃ‚Â at the expense of Sony Ericsson and Motorola. They also have to be wringing their hands over the potential of Qualcomm's MediaFLO mobile TV business. AT&T recently postponed its plans to deploy the service until early 2008, and many are beginning to question mobile TV's ability to become a killer application.
Expect fiscal year 2008 to be a roller-coaster ride for Qualcomm investors. Will they be able to keep from getting nauseated?--Lynnette