ku, Re: QCOM valuation / impact of GAAP, Options expensing, and –
1. “You wrote "I think you you’re overlooking the growth element..." I'm not and you're missing my point.”
2. “Decline is not growth and valuations in the face of declining GAAP has not been looked on kindly by Mr. Market.”
I understand you’re playing devils advocate, concerned with the market reaction to QCOM, and looking for an explanation for such. But, in all due respect, IMO it is not the GAAP issue.
As Slacker and John G have commented -
.....” the analysts are all working with pro-forma numbers anyway.”
.....”I really don't think it is necessary to make up the $0.18 in earnings. The QCOM accounting presentations are clear and conservative so you can see the trend in earnings from operations VS non-operating items like charges based on stock options awarded years ago.”
....”.. we wait to see if there really is an acceleration in WCDMA uptake...”
3. “My use of TXN, NOK etc for comparison are at least as valid as your use of GOOG, EBAY etc.” <<<<<<
Again, NOK and their supplier TXN are NOT “premiere” growth companies, not even growth companies IMO. They are / were the dominant companies that benefited from GSM and their days are numbered as the mobile wireless world transitions to 3G (CDMA/ WCDMA) and the playing field levels.
A vast new market (GSM subs) opens to Qualcomm for the first time as 1.3+ Billion subs convert to 3G, and the Q begins to realize revenue from CDMA/ WCDMA handset sales growing at a 5 year compounded annual growth rate (CAGR) of 32%. The “analyst” community for the most part is in a “wait and see/ prove it to me” mode and has not built this into their models yet. The consensus LT growth rate is ONLY 20% as some are using 10% waiting the average down.
Further, with the BRCM/ EC anticompetitive claims and Sarbanes-Oxley, Qualcomm remains fairly subdued in talking up the growth story that lies ahead.
As John G and others have expressed, the “market” appears to be “waiting to see if there really is an acceleration in WCDMA uptake”. As regards QCOM, the “market” is in a “show me / prove it” mode.
Remaining catalysts-
1. Proof of robustly accelerating WCDMA growth
2. China 3G licenses let
3. Positive settlement of EC/ BRCM claims.
................Growth per Yahoo/ First Call
................last 5 yrs....next year.......3-5 years
QCOM......25.4%........18.2%...........20%/ year- IMO understated – several analysts w/ 10%
NOK.........n/a..............05.9%..........10%.........- EPS growth from R&D cuts / stock buy back
TXN..........11.0%........12.2%...........20%.........- IMO overstated , in wireless any way (ref NOK) |
