Larry Bellehumeur

Five Great Companies to Buy at a Drop

234569 -- Couple of points. GSM (Global System for Mobile communications) is actually the over the air technology, like CDMA, and does not refer to the generation of product. GPRS is actually 2G in the GSM family, with 2.5G being EDGE, and their initial launch into 3G being HSPDA/HSUPA and now HSPA.

Most GSM carriers, and many CDMA carriers will actually be moving to LTE when it is available, as my comments show.

You may have missed the point of my article entirely, though. We can argue for days as to where this market might go in 3-5 years. No one will ever win that argument. My point wasn't to challenge their technology, or their business model. My point was their EVALUATION at this stage of the game. Should a company that has serious threats to its revenue stream be trading at such a multiple (in a time when companies are facing serious Multiple contraction due to the threat of inflation)?

Finally, I don't get a cent for my time. I'm just a Do it Yourself investor, who wants to share his opinion. For the record, I've averaged 13% since 1998, even factoring in the last two bear markets. I've built a net worth that I can easily retire from, even at the age of 36. I have been featured in the Associated Press, and as of next week, Canadian Business and the Globe and Mail. But, all of our opinions count on here, so I appreciate yours....

Larry

Five Great Companies to Buy at a Drop

LT / Experienced....while Wikipedia is not the most "professional" source for information, please note what it lists for Carrier Adoption of LTE, as it echos what I have heard from the US Carriers:

en.wikipedia.org/wiki/...

Carrier Adoption:
Most carriers supporting GSM or HSPA networks can be expected to upgrade their networks to LTE at some stage. However several networks that don't use these standards are also upgrading to LTE.

Alltel, Verizon, the newly formed China Telecom/Unicom and Japan's KDDI have announced they have chosen LTE as their 4G network technology. This is significant, because these are CDMA carriers and are switching networking technologies to match what will likely be the 4G standard worldwide. [16] They have chosen to take the natural GSM evolution path as opposed to the 3GPP2 CDMA evolution path UMB.

Verizon Wireless plans to begin LTE trials in 2008, choosing the standard over the natural evolution path for the CDMA2000 family, Ultra Mobile Broadband (UMB).[17]

AT&T Mobility has stated that they intend on upgrading to LTE as their 4G technology, but will introduce HSUPA and HSPA+ as bridge standards. [18]

T-Mobile, Vodafone, France Télécom, Telia Sonera and Telecom Italia Mobile have also announced or talked publicly about their commitment to LTE

Bell Canada plans to start LTE deployment in 2009-2010
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One would think with these types of comments publicly by the major carriers in the world, investors might be a bit more spooked...

Five Great Companies to Buy at a Drop

LT -- I don't dispute what Experienced is saying, from a Technology standpoint. That is a path that the carriers can go. From my discussions, many are looking at LTE, however.

However, many still will go to W-CDMA, and Qualcomm will not be going away anytime soon. The point of the article was questioning its evaluation in the face of competition, and market uncertainty. At a lower multiple, Qualcomm is a fabulous company.

Cheers and thanks for reading!

Five Great Companies to Buy at a Drop

Many thanks for reading. One of these days, I'm actually going to write an article that people like....=)

PaulMars -- In terms of CL, it isn't a bad buy, if you are assuming that normal market conditions are present (by normal, I mean that we are entering into a normal downturn). There are a lot of ifs in their short-term potential growth (by that, I mean rising potential costs), and I don't believe that those are accounted for in their evaluation. I'm not saying that it should fall by 40%, but a 10-15% drop would put it more inline with expectations. They do have a great growth path internationally, and are ever expanding their market share (points that I don't disagree with you on). I just believe that you can find similar growth patterns for a lower price....

Experienced -- I wouldn't be so quick to dismiss LTE. You sound like you are in the Wireless space, so i am sure that you are aware that Verizon has formally announced their plans for LTE. I suspect that others will follow (I am a Sales Director for a company that sells to all major North American carriers, and I know that all of them have begun testing). As for WiMax, it may have some play in the Rural areas, but I don't suspect that it will ever be a large challenger.

My point wasn't that the company was going to roll over and die. Their business model is a strong one....my point was that I believe that there were serious challenges to its technology and this wasn't being factored into the stock price.

Your view points are well taken, though. I would still give it a superior Multiple to the general S&P at 18x or so times current earnings (even in a down market).

Again, thanks for taking the time to read, and to comment!