Interesting Take On Earnings>
scottcardiff
1/24/00 12:50 pm
I expect Q to announce pro-forma (without HD) earnings for Q1 of .35/share (I stated .38 in earlier post, but that's
optimistic). This is .13/share above Q4 '99. There are 777 million diluted shares, so this is 101 million Q's (dollars).
Where do I expect 101 million?
* Royalty payment increase of $25 million over Q4 - all profits.
* Other business increases of $25 million in profit.
* Efficiencies from sale of HD of $50 million. Heck, we lost $40 million last year in this division. That's $10 million per
quarter. Plus, Q should write off a lot of overhead, for which they will take a charge in Q2.
Note: As I understand, pro forma will include treating Q4 as Q selling chips to Kyocera (is this correct?)
Yes, there are some assumptions re: HD here that I haven't substantiated. It just seems that if you get rid of a division that
makes up 35% of your sales and actually hurts the profitability, you will see some nice numbers by removing the division.
Assuming .35/share pro-forma and 15% Quarter over Quarter growth (remember Q's ASICS sales projected to double
in 2000 & CDMA subs projected to more than double) results in:
Q1=.35
Q2=.40
Q3=.46
Q4=.52
2000 eps of 1.73 (my estimates)
Forward PE of 86
Growth from '99 of 133% (.74 cents pro forma with HD in '99)
Forward PEG of .64
Now, IMO, ambiguity is holding Q back. Ambiguity will be seriously reduced after tomorrow, with release of pro forma
numbers.
Some numbers for 2 flyers without, IMO, the uncertainty of Qualcomm.
BRCM
Price= $299
Forward eps (my estimates) = 1.88
Forward P/E = 159
Growth Rate 95% (over '99 eps from Yahoo)
Forward PEG 1.67
JDSU
Price = 230
Forward eps (my estimates) = 1.08 (Oct 99-Sep 00)
Forward P/E = 213
Growth Rate 129% (eps of .47 for Oct 98-Sep 99 from Yahoo)
Forward PEG of 1.65
Apply a forward peg of 1.5 to the Q
gives you a forward pe of 200. Apply to my estimated earnings of $1.73 and you get a price of $346/share.
Obviously, this depends on a great report tomorrow. Even reducing '00 estimates to 1.50, (reduce Q1 pro-forma to
.30/share & Q/Q growth of 15%) you get a growth rate of 102%, a forward pe of 100, and a forward PEG of .98. Give
it a 1.5 forward PEG and you've got $223/share.
Hence, if Q hits anywhere close to .30-.35/share pro-forma & gives some good guidance, IMO, you will get some
serious upgrades.
Only 10.75 more trading hours to get in.
my word, reading this, I forgot about China, HDR, AT&T capitulation, GM ASICS, Nokia deal. Oh my, back to the
calculator <g>.
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