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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

QCOM 166.81

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To: Ramsey Su who wrote (25136)	8/11/2002 2:12:52 PM
From: Art Bechhoefer	Read Replies (1) of 196660

The Aug. 12 issue of BARRON'S has two articles that mention QUALCOMM, providing another example of damning by faint praise. The lead (cover) article discusses whether this is the right time to get back into tech stocks and concludes it may still be a little too early. The writer likes bigger stocks, which demonstrates the conventional wisdom: When in doubt, go with the bigger players, rather than the smaller, better managed firms with new products and proprietary technology. The second article in the Technology section grudgingly acknolwledges that QCOM makes a lot of chips, but points out that its technology may be sort of overkill. This is the typical thinking of the Nokia/AT&T types who still aren't ready to admit that CDMA is technically superior and costs much less. The articles are valuable in the sense that they suggest where institutional money isn't flowing--into stocks like QCOM, or smaller ones as well. They didn't like Intel because of weakness in demand for PCs, and because Intel didn't have much exposure to telecommunications. They preferred Texas Instruments for that reason. But what they didn't say was that the fastest growing part of the semiconductor industry was in chips for handsets and flash memory. One of the leaders in flash memory is SanDisk, but it is so much smaller than the largest 20 stocks under consideration in the lead article that it doesn't get mentioned. This is a mistake made time after time by analysts--treating every company in a sector as if the sector problems affected every company uniformly. One has to conclude that the kind of thinking in the BARRON'S articles works against a rapid recovery. For QCOM, the recovery will probably be on its way when the one-time additions from the Telefonica purchase of Pegaso appear on the bottom line (probably in the next financial report). If the Pegaso related earnings for QCOM get reported in October, and if their chip sales continue growing as predicted earlier, the result will be stunning, especially because of the earlier drag on profits of the QSI segment. Art

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