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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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To: straight life who wrote (237)11/1/2003 9:37:22 PM
From: Mike Buckley  Read Replies (1) of 2955
 
Larry,

I was interested in the conclusion of your value perspective and how you arrived at it

To justify Qualcomm's current price, the company needs to consistently generate increasing gobs of free cash flow as I measure it. The percentage of increase of the past few years needs to continue for at least a few more years. Otherwise, I can't justify an enterprise value that is equal to nearly 30 years of trailing free cash flow.

To add perspective, I will generally allow a higher relative valuation to contine holding a stock than to buy it. That's because a sale of stock generates tax consequences and the risk of making yet another decision to ultimately deploy the funds created by the sale of the stock.

I hope that answers your question.

--Mike Buckley
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