re: BW article:
The important sentence is: "few on Wall Street have been willing to buy Qualcomm's rosy projections". To put it bluntly, the Street and the business press think QCOM management is totally wrong about their control of WCDMA IP, ability to make WCDMA chips, and royalties. Management has said, over and over, that royalties will be the same regardless of CDMA flavor, but that has not changed the press's opinion (or stopped the stock slide). Obviously (look at the stock chart for confirmation), a lot of smart people with a lot of money have looked at this question, and decided the Street is right and QCOM is wrong.
This article could have been written by the same person who wrote the recent WSJ article. It's almost as if there is a "hive mind", a "GroupThink", that controls all the business press. Having everyone write the same thing at the same time is very important to them. Writing the same thing they wrote yesterday is not important. No matter how smart or informed a Homo Sapien is, he still has herd behavior hard-wired into his genes.
The consensus of the Gorilla and QCOM threads is that QCOM is right, and the Street is wrong. My take is that, if threaders are right, there is a huge upside to the stock, and if the Street is right, there is little more downside, as it is (mostly) in the stock already. The risk/reward ratio is tilted strongly in favor of QCOM. But this is only true with the stock below 60, and 50 would be better. Buying at 200, when all the good news is in the stock, means that surprises are likely to be unpleasant. Buying now, when bad news is in the stock, means surprises are likely to be pleasant. In my experience, surprises always happen. My guess is the stock will bottom between 52 (just happened, and will happen again as we set a double bottom), and 35. My January 2003 price target is 150 (3$ EPS in 2003 X forward PE of 50).
I am encouraged that the stock went up after the WSJ article. I will be further encouraged if the stock doesn't go down on this BW article. And I will be encouraged enough to buy, when I see 50M+ shares traded in a day. I am a herd animal too. I don't want to be the first penguin diving off the ice, as there may be orcas in the water. You jump in first and show me it's safe. My current thinking (it changes daily), is to put 10% of my money into the stock at 55, another 10% at 50, and start buying LEAPs (2003 40s), at 45, 40, and 35. I'd be out of cash, margin, and courage if we get to 30.
JS@3X50in2003.com
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