Why Q Is Burning Up The Street> Fortune;
Why Qualcomm Is Burning
Up the Street
Moon Shots
Christine Chen
These days, everyone's blase about hot
tech stocks--this one's on a tear, that
one's skyrocketing--yada, yada, yada. But
even hardened skeptics have to be
impressed by Qualcomm's warp-speed run.
A year ago, the wireless communications
company was trading at $25. By April, it
had reached $100. In October, it broke
$200, and by Nov. 12, it had hit $378.
That's a 1,400% increase for one of
FORTUNE's 100 Fastest-Growing Companies
and a member of our new e-50 index.
So why is Qualcomm flying so high? The ball
started rolling in March, when Qualcomm
and Ericsson made peace after a long
dispute over a wireless standard called
CDMA, which Qualcomm developed. That
opened the way for Qualcomm to rake in
royalties from CDMA users. Even more
important, many investors are betting that
CDMA will be the standard in the emerging
arena of wireless Internet
communications--a market with huge
potential.
There have also been some year-end
fireworks. Fourth-quarter earnings,
announced Nov. 2, topped estimates, and
the company declared a 4-for-1 stock
split--its second split in 1999. Meanwhile,
investors who missed the initial move in the
stock are trying to get in now, hoping it's
not too late.
Although some analysts question whether
the Qualcomm surge can continue, many
institutional shareholders are holding on for
more gains. "In the long term, Qualcomm
has the wireless business by the scruff of
the neck," says Kevin Landis of Firsthand
Funds. "They're going to be dominant."
Issue date: December 6, 1999
Vol. 140, No. 11 |
