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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 179.26+0.5%3:59 PM EST
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To: Jorj X Mckie who wrote (111038)1/16/2002 6:32:53 PM
From: Art Bechhoefer  Read Replies (1) of 152472
 
>>the ideal shorting level is between $48 and $49. This is based purely on TA<<

Jorj, perhaps a little fundamental analysis would lead to entirely different conclusions. Granted that the weakness in QCOM share price is due partly to lower predicted cell phone sales throughout the world, and also to pessimism over the slower than expected economic recovery in the U.S., coupled with competition from those still bent on expanding GSM-GPRS. But on the positive side, QUALCOMM relies increasingly on royalties, which deliver income with little overhead. Meanwhile, OTHER equipment providers rely increasingly on profits from selling units as a whole (e.g., Nokia), which means that in slow growth periods, they are apt to experience pressures on profit margins.

Because the QUALITY of QCOM earnings appears to be much better than earnings from equipment manufacturers, one cannot assume that QCOM share prices should vary in a similar fashion to other equipment providers. In short, the growing percentage of income derived from royalties places QCOM in a more profitable position relative to its competitors. This scenario is not reflected in the conclusions one can make from a purely technical analyst perspective.

Art Bechhoefer
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