Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 170.58

-0.2%

12:01 PM EST

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To: firstflight who wrote (91074)	1/2/2001 9:12:02 PM
From: ratan lal	Read Replies (3) of 152472

Re: CSCO PE 93 - Frankly if I was going out to buy a company, i would not pay more than what I can earn back in 2 years. That would mean a p/e of 2. If earnings were to remain constant, then with a PE of 93 it would take you 93 years to recover your investment. For companies that have demonstrated high growth and 'continued potential' of high growth we can pay a higher price, but only to the extent that we can recover our investment in 2 years. So the earnings would have to multiply approximately 35 times in each of the 2 successive years. (could do the calculations to arrive at the exact numbers). And potential earnings are fraught with uncertainties as is evident from the restatement of earnings and earnings surprises. Of course in a private transaction the competition to buy is not as fierce as it is in the public markets. Hence investors end up paying a hell of a lot more which then gets equalized sooner or later with market downturns or even meltdowns.

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