re: if QCOM can make $1 per year (roughly) off of 60-70 million CDMA devices/users, how much can they make off of 1-2 billion?
Well, that's simple math: 1/65M = X/1.5B, solving for X gives 23$ EPS in 2005. That works out to about a 90%/year EPS growth rate. I think 40%/year is a lot more reasonable, and a lot closer to what the consensus of informed opinion is. So, I think 6$ EPS in 2005 is a better guess. And, most of all, I think trying to guess that far out in the future (and making investment decisions based on that guess), in an industry changing this rapidly, is little better than tossing dice.
The other part of your assumption for 2005 is equally suspect. No company can maintain a triple-digit forward PE over the longterm (5 years). It has never happened, and it never will. If you know of any company that has ever done that, please tell me.
And yes, the calculated market cap is absurd, at 2500$/share. (Did you include all the employee options which will be exercised, allowing for present shareholder dilution or subtracting a lot of earnings if the company buys back shares to compensate? I'll bet you didn't.......)
JS@rationallyexuberant.edu |
