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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (5002)8/21/1999 3:27:00 AM
From: LindyBill  Read Replies (3) of 54805
 
Joel forwarded an interesting post on Q from Moore's G thread. I told him I would post it here for comment.

>Another issue with QCOM is one that I mentioned before and did not see too
>much response to. If QCOM is so great (as recent stock market speculation
>indicates), why is their year over revenue growth has been slowing down for
>the last 4 quarters?
>June 98 -68%,
>Sep 98 -54%,
>Dec 98- 19%,
>Mar99 -22%,
>June 99-14%.

And why is their return on equity so feeble: 7.9% and 13.1% in the past 2
years (all financial numbers from Value Line)? Granted it's going up, but
13.1% is no big deal. Dell shows more than 4 times that, and they are no
gorilla, just very well managed. And QCOM's margins for the past 2 years
are also very tepid: 3.9% and 3.8%. No improvement at all there.

QCOM has almost 40% of its financing in debt, in the form of convertible
preferreds, and, more to the point the conversion price is < .5 the current
market price. That represents *enormous* potential dilution for someone
buying the common.

At the current market price QCOM has a PE on *estimated* '99 earnings of
around 72. This is no great bargain by any standard.

Of course one can always argue that a brilliant future justifies such a
phenomenal price, but *no one* knows the future with certainty. When I put
my hard earned money into something I either like a very clear future (and
little in tech is ever that clear), or a good price.
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