it is interesting to see how different methods produce very different results.
So while revenue may only reach ~9B, operating margins should approach 50%.
i think that may be a bit ambitious. MSFT, for instance, only has operating margins of about 40%. QCOM may have a great business model, but it ain't no Microsoft. i would consider 30% margins to be an excellent figure to shoot for. if you run the calculation i presented in my last post assuming 30% margins, the dollars per handset is still quite high ($36.58). but in any case, i guess we will see the reality, whatever it is, unfold over time.
Incidentally, how does your DCF/valuation model price QCOM's NPV if it should grow from $1 eps to $5 eps by 2006 (I think that works out to a CAGR of 40% over 4 years)?
i really want to assume some sort of market-beating growth figures out to 10 years, since it is posited that QCOM should have stellar growth for that period. so if i assume 40% CAGR for years 1-4 and 20% CAGR for years 5-10, with an expected return of 13%, then i calculate NPV at around $35. if expected return is lowered to 11% in this scenario, then i calculate QCOM is at NPV now.
however, i would state that i think both 11% and 13% are too low as expected returns if i am to assume the incredibly high 40/20 growth scenario.
all JMHO. good luck! |
