CDMA is the only way

Last week I did something that I rarely manage to do - I sold a holding at a loss.

I know you are supposed to cut your losses and hold your profits but I hate selling at a loss. Nevertheless, with Qualcomm (QCOM) at a very attractive price last week I decided to ditch Verisign (VRSN) and get a slice of QCOM while the price was so low.

VRSN is basically fine but the share price seems to be stuck in the $20 - $25 range and the company is intent on a series of acquisitions in highly competitive markets.

I bought VRSN almost a year ago on impulse without doing much research. Unfortunately I bought in too soon after a bad earnings release and the share price continued down another 10% and pretty much stayed there. That will teach me not to do all the due diligence.

What about Qualcomm? QCOM owns the technology the enables 3G (high speed) wireless communications. If you own a 3G phone then QCOM will have received a royalty for it, either through the chip or through licensing their CDMA technology.

The market is complex as part of the world (particularly Europe) use the UMTS standard for 3G and other parts (e.g. Korea and Verizon) use CDMA2000. These standards are incompatible. However the key point is that both standards use QCOM's CDMA technology for the 3G component of the standard. As 2G (GSM or CDMAOne) phones are phased out over the next five years or so the growth in 3G phone sales has to accelerate.

The QCOM share price has dropped recently as there has been some talk of operators exploring GSM rather than CDMA. However going forward, as far as I am aware, there is only one path for operators to take, and that involves CDMA.

So I am not sure what all the fuss is about. But $38 is a great price for a company of the caliber of QCOM.

As Jack Miller once said, buy QCOM with confidence!