QCOM earnings:
Unfortunately I have been much too close to the computer the last few days and this QCOM move has been very painful. I am struggling with the possibility that Q is dead money for the
rest of the year or longer. If it is likely to be dead, then I need to make a conscious,reasoned decision about what to do:
1. Sell and diversify
2. Convert to LEAPS
3. Nothing
DS,
You and the other thread elders are my mentors (even though you could not tell because of my lack of postings). FWIW, I am planning to do nothing. My reasoning is simple: I trust QCOM management more than Snyder who seems to have an axe to grind.
Management has repeatedly said they are comfortable with estimates. Looking at their FYQ1 and FYQ2 reports, they shipped 14.5 and 11 million ASICS respectively. In Q2 report, they mentioned that bookings were strong and they expect to exceed the 14.5M ASICS for FYQ3. In mid May they announced shipment of 100M ASICS to date. That number is up from 92M ASICS cumulative in FYQ2. So they had already shipped 8M by middle of the quarter. They will probably do 15M or 16M ASICS this quarter. Now, with 11M ASICS shipped, they earned 26c proforma in FYQ2. They should easily eclipse that in Q3. The only unknown is royalty revenues for Q3. Based on what I am seeing in press releases, they have signed up some new licensees this quarter. Don't know how these license revenues are recognized, but I will be shocked if they don't beat their number.
Lastly, given this management's penchant for understatement, they have made some pretty bold projections. I just don't see them not delivering. Selling and being out of the stock is meaningless at these levels. Where else would you get a Gorilla with a nice low PEG ratio (under 1.5?). Converting to LEAPS is tricky, because we don't know where the bottom is. Holding stock will give you more peace of mind.
Sorry for the long drawn out response. Probably stating the obvious for most on this thread. However, typing this helped clarify my own rationale for holding <G>.
Regards,
Piyush |
