October 06, 2010, 1:50 PM — The Wall Street Journal reports Wednesday that wireless telecom player Qualcomm is halting the sale of $249 hardware used by subscribers of its FLO TV mobile broadcast-video service.
As the Journal explains, Qualcomm sees far more value in the real estate -- that is, the wireless spectrum that powers FLO TV -- than the actual service (which ends next spring). And rightly so.
Qualcomm reportedly has been shopping around FLO TV, but found no buyers. Not really a surprise. The fact that Qualcomm never shared subscriber numbers for FLO TV obviously was a bad sign. And the Journal reports that Qualcomm CEO Paul Jacobs was disappointed with subscriber levels.
But the spectrum...
Qualcomm bought the wireless spectrum powering FLO TV for $125 million, but estimated it ultimately spent $800 million on FLO TV. The spectrum could be sold for as much as $2 billion, according to an analyst quoted by the Journal. Even with the build-out and marketing costs that failed to pay off, that's a pretty good return on the investment. Prospective buyers would be wireless carriers such as Verizon Wireless, Sprint and AT&T.
In early afternoon trading Qualcomm (NASDAQ: QCOM) was down 7 cents to 44.19. But shares are up 40 percent since hitting a 52-week low of 31.63 on July 1, even though revenue declined in the company's fiscal third quarter from a year ago.