Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 179.02

+3.7%

Nov 5 3:59 PM EST

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To: Maurice Winn who wrote (129464)	6/2/2003 10:09:14 AM
From: Stock Farmer	Read Replies (3) of 152472

Mq I admire your enthusiasm. And indeed I think that there may eventually end up being a billion or two or so CDMA thingies scattered across the planet. But that conclusion by itself is not enough to justify a purchase of QCOM. After all, if billions of thingies define a great investment, then we should all buy truckloads of sand. There are two other important factors. The first is how much each of these billion things will end up being worth to Qualcomm. And the second is how much of whatever this worth turns out to be you or your heirs, successors or assigns will actually be able to take away. Reduced to present value. So maybe each CDMA thingie on the planet ends up being worth $5 to $8 in royalty revenue to Qualcomm. With things as they are and shares outstanding as they are, that's about $4 to $6 per billion CDMA thingies sold so if we like QCOM at its current price we're looking at somewhere between 6 and 9 Billion CDMA thingies being sold. Tomorrow. Which ain't gonna happen. If it takes 20 years, a bit of actuarial doodling gets us to a necessary range somewhere around 4-8 times this number. Assuming you and I are greedy enough to want a decent return on investment. And while it is just within the realm of possibility that two billion folks might suddenly decide to pick up a CDMA thingie and dispose of it every 20 months, we're already about 1.8 Billion short for the 2003 and even Qualcomm suggests we'll be 1.8 Billion short for 2004... so our meagre 7% return is hanging on by a thread. And that's assuming every dime flowing into the company somehow avoids getting sucked into some strategic purpose and instead finds its way back to you or me or your heirs, successors and assigns. Tax free. Which would be a reasonable assumption if it weren't for how business gets done in China, for example. US shareholders aren't going to see a dime of any revenue generated in China. It might pile up on the books as an "asset"... but convert it to hard currency and export this from the country? LOL.. good luck. I believe that CDMA will be widely deployed. My problem with the PRICE of QCOM is that as wide and successful as CDMA is likely to be, Qualcomm isn't in a position to turn that into legitimate investment returns. John

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