This proposition will pay off at POP$100 per share if there are at least 4 billion mobile subscriptions worldwide by January 1, 2009.
I thought this was a sure long at first, until I read this article at "http://www.contrarianprofits.com/articles/cell-phone-indicator-warns-of-emerging-market-slump/9085
Now the article mostly addresses cell phone investments for 2009, but two things really struck me. First, this bit:
"In Q3 2008, about 309 million mobile phones were sold world-wide, Gartner said - a 6% rise from a year earlier, but a sharp drop from the 16% year-to-year growth seen in the Q3 2007."
And second, this bit:
"This is in stark contrast to earlier numbers from Gartner, which showed that Q1 2008 Asian cell-phone sales jumped 26.6% from the same quarter in 2007, driven by demand in India and South Korea."
"So big whoop", you may say, "this prop only needs 700 million new users in 2008 to satisfy the prop."
Or maybe you just said "Huh? So?"
Let's look at it two ways. First, to jump from 3.3 billion in 2007 to 4 billion in 2008, you need around a 17% increase from year to year in NEW CELL PHONE ACCOUNTS to satisfy the prop. (700 million is roughly 17% of 3.3 billion). This isn't actual cell phone sales, this is people opening new accounts for service, like prop requires.
Now as the prop (and the article cited above) indicate, most of this growth will come from developing regions. But guess who's getting hit hardest in this economic downturn? The developing regions that have built their economies on selling cheap s**t to the west.
So if the developing nations (and India and China) see a downturn in new cell accounts (as the article above indicates) then there's no way to hit 4 billion.
Now the second way of looking at it...
If you look at the numbers cited in the article above and in "http://www.pcworld.com/businesscenter/article/154600/gartner_economy_hits_cellphone_sales.html, you'll see that HANDSET sales worldwide were on track for about 1.2 billion. That would be enough to satisfy the prop if all the new handsets went to new account holders.
Even if half the new handsets went to new users it would satisfy the prop.
But the reality is that most new cell phones do not go to new accounts. Rather, they go the the billion or so people who buy new phones to replace or upgrade their phones each year. (I can't find a link to the article that gave that statistic, but it's not hard to see how it works... your contract is for two years, then you take the new phone with a new contract when the old one runs out...)
From the numbers, it looks like any way you slice or dice it, it's not going to hit 4 billion.
This is a short, short, short.
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Bump
from Clovis, NM
Folks... Look at this link CELLUSERS is LONG.
http://www.cellular-news.com/story/35298.php
WRONG! The article (and every other version of the article you can find, including the original source of the news bit at "http://www.3gamericas.org/English/index.cfm") states that there are "4 billion connections to mobile devices worldwide".
That means there are 4 billion CELL PHONES out there. But the prop says that it must be 4 billion SUBSCRIPTIONS. Since track phones are becoming more and more popular, they will still count as cell phone uses, but since there is no contract or monthly service fee, they are not "subscriptions". Government agencies, emergency services, corporate accounts, and international agencies have single subscriptions, though they have numerous users.
Not to beat up on the wording alone, let's look at the data from "3gamericas.org", the organization that issued this "estimate". 3gamericas is a wireless service industry group dedicated to pumping, cheering for, and promoting the GSM cell phone standard.
Check out "http://www.3gamericas.org/English/Statistics/Q3_2008_1.cfm"
"http://www.3gamericas.org/English/Statistics/Q2_2008_1.cfm"
In June of 2008 they estimated 3.65 cellular users worldwide. For the third quarter they estimated 3.8 million cellular users worldwide. That's a growth of 150 million in a quarter. Now if the fourth quarter stayed the same, it would be really close now... but with the world economy in the hopper, it's unlikely the same growth was maintained.
This "estimate" was probably a rah-rah industry-pumping bit of fast-and-loose statistical fudge-packing, but unfortunately it is probably enough for this prop to pay out long.
And then a few weeks from now we'll see a release from a more believable source, which will show this was wrong...
That article and every other reference to it states that it's 4 billion CELL PHONES in use, not 4 billion SUBSCRIPTIONS (as the prop requires). Since millions of cell phones are used by corporate,emergency service, government, and international agencies that have many users on a single account, not to mention "family plans" that include several phones on a single account, it's clear that the number of cell phones in use doesn't represent the number of subscriptions.
Also, from the context of the original release of the article at "http://www.3gamericas.org/English/News_Room/DisplayPressRelease.cfm?id=3452&s=ENG, it's pretty clear this figure was delivered from the long-standing prediction of 4 billion users by year's end. There's no reference to where their numbers are really derived from, and no statistics on the site that demonstrate 4 billion has been reached (and they have a lot of stats).
Unfortunately, the fact that this report is a lot of tripe and does not reflect the worldwide economic downturn, it will still probably be accepted that the prop was proven true. Then, a few weeks from now an accurate report will be released that shows we did not reach 4 billion this year.
So lame.
from Clovis, NM
Like chris in the first response to your original blathering....
bump^2
How insightful, braat814. You really contributed a lot with that post...
Vulgarian,
Though your post is logical, barrt814's is probably more along the lines of what PopSci will use.
I'm going to suppose that spelling his name wrong was an accident, rather than an attempt at an insult (which is what the tone of that post lends itself to).
Scojac; that's what my later post was saying, that the "announcement" of 4 billion cell phones was probably not enough to satisfy the prop if it was looked at closely... but it's probably what Popsci will use to decide it.
(Pointlessly) there's something else fishy about the whole "4 billion cell phone users" figure. The figure is largely derived from "www.3gamericas figure on their front page, listing over 3.5 billion ACTIVATIONS of the GSM service to date. There is nothing to show that there are that many CURRENTLY ACTIVE accounts.
How many of you have switched carriers in the past few years? Each time it's a new activation. What happens if you expand those numbers worldwide? What about the third world people who can't maintain an account and let it lapse? It's still an "activation" even though the account is no longer in use.
Further, they talk about "75% penetration" in Latin America. 3 out of 4 people in Latin America owning cell phones? The highest per capita income in Latin America is probably Mexico, and I doubt that figure tops 9 grand a year. Are these people who have to worry about food in 90% of their populace shelling out monthly subscription charges and buying cell phones for Mom, Dad, and 4 of their 6 kids?
And don't accuse me of stereotyping. Have you ever been outside a major city in Latin America? You'll know this isn't so.
I wouldn't be surprised if down the line we find out these numbers are seriously inflated, and that there aren't more than 2.5-3 billion actual cell phone accounts in use.
Not that this will change the way the prop goes... it's just an observation on the questionable nature of these statistics.
from Brooklyn, NY
Ok, I found a link for subscriptions.
http://www.cellular-news.com/story/35298.php
from Brooklyn, NY
ok, I just realized that was the link being discussed.
But in the first paragraph it states: "...historic milestone was achieved for the wireless industry in December 2008 with 4 billion connections to mobile devices worldwide."
Let's just make this clear "4 billion connections" not phones
Nope. 4 billion "connections to devices". It does not say "subscriptions" or "subscribers" or "accounts".... and if you check otu the originating organization, you'll see on their home page the number of "activations" they are tracking.
This is a trade group that's playing awfully fast and loose with the facts.
from Brooklyn, NY
Did you by any chance look at the title of the article?
from Clovis, NM
Vulgariette, relax, let go of the rearly inserted stick, and buy cellusers. You will feel better in the morning.
from Clovis, NM
OOps, sorry vulgariette... I guess it halted. Lets see how it pays out.
Well, bratface, I already owned it because I know this sort of quasi-statistical-pud-pumping is the way trade groups do things, and that these fictionalized stats tend to get repeated over and over as if they were gospel.
I didn't see any point in losing out on a payoff, even though there's very little to make me believe the numbers are grounded in any fact.
All I'm saying is that this "announcement" is probably enough to warrant a payoff, even though it's probably BS.
(But then again, you probably didn't read anything I wrote in the previous posts, so you really don't know WHAT I wrote.)
traderboi--the title is pointless. If the underlying numbers are BS, then the title means nothing as well.
from Clovis, NM
Comment noted, vulvarian. And yes, you are right about trade groups.
from alpha, il
Trade groups are like laywers and oil companies, not to be trusted with a bread crumb.
from Brooklyn, NY
Wow Vulgarian, You don't even have the rocks to put your money where your mouth is.
In case you didn't notice, traderboi, my mouth (or more accurately, my fingers) put down these words in a post above;
"Unfortunately, the fact that this report is a lot of tripe and does not reflect the worldwide economic downturn, it will still probably be accepted that the prop was proven true." (I know, that's a crappy sentence, but it says what I wanted to say).
I put my money where my mouth is... I put it down in the direction I thought the prop would go, in the direction I SAID I thought the prop would go.
If that's a lack of "rocks", then waveriding is the most "rockless" way of playing this game. It involves changing your position every time a prop moves, without any regard for facts or any belief in (and often knowledge of)the props.