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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (46004)9/1/2001 12:18:08 AM
From: hueyone  Read Replies (4) of 54805
 
<<The people who looked through the windshield at QCOM quality and potential while ignoring QCOM's financial condition have been hammered.>>

I meant financial condition relative to stock price.

What are the issues about QCOM's financial condition that you feel led to the fall of the stock price?

My best guess is that QCOM fell (prior to the tech wreck) because the momentum players left and went elsewhere. Nevertheless, QCOM stock price was ridiculously expensive and had about zero chance of growing in to its value. When QCOM hit $200 per share on Jan 3, 2000 it was selling at 645 times trailing GAAP earnings of 31 cents per share, had a price to free cash flow ratio of 64,516 and had a price to sales ratio of 33 on revenues of nearly four billion dollars. The ratios are all based on the most recently reported year end at the time---9/30/99.

I am sure Bruce Brown or someone will correct me if I am wrong, but I doubt there is any historical example of any company in any time, that already had nearly four billion in revenues, that went on to grow earnings, revenues, and free cash flow fast enough to justify such sky high ratios. QCOM had to come down sooner or later. Lost momo players, delayed China news, delayed Nokia license news, etcetera were just near term facilitators in its manifest destiny for lower prices.

Best, Huey@easytosaynow.com
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