MM--Many unexpected factors can interfere with anticipated growth, and QCOM had its share of them in 2000 and 2001. Not being a technical analyst, I look mainly at the fundamentals, which in this case include not just the ability of the company to create new intellectual property but the ability of management to translate ideas into products. A two-year time frame is often too short to judge company performance, and in particular, the relation between stock price and earnings.
As to the alternatives, in my mind an investment in TIPS or longer term Treasuries gives too little return, even considering safety. One can do better with a variety of stocks. For example, Washington Real Estate Investment Trust (WRE) has returned more than 18% compounded over the past 20 years or so, if you include both the dividend and the increase in shareholder equity. The trust is rated as one of the five most conservatively managed, with lower debt levels than almost any other REIT. If I'm looking for some income bearing securities, I'm going to look more seriously at WRE than at Treasuries.
You can't depend on a smooth, gradual increase in earnings in companies like QUALCOMM. Take, for instance, the impact on earnings of the changes created by the investment of the Spanish mobile phone company in Pegaso. Recall that QCOM already took a $600 million charge on its investment when Pegaso was unable to cover some of the payments to Q. Now that Pegaso has more funding, one can expect that $600 million to show up as a one-time ADDITION to earnings, perhaps in the next earnings statement.
I try to stay abreast of developments in the technology as best as I can. The inherent economic rationale of CDMA over any other system, combined with the quality of management at QUALCOMM, gives me enough confidence that the fundamentals (growth plus good managmeent) are still in tact.
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