It's not my preference that I be correct either. I am intending to hold QCOM but there are tax changes coming up in NZ which might mean selling.
The whole market seems to have done a post biotelecosmictechdot.com Y2K/911 multi-year dead cat bounce and I don't believe interest rate increases are over. So I think there will be a market rollover and down while everyone adjusts to still higher interest rates, lower house prices, higher oil prices and no pay increases.
Debt levels worldwide seem to be very high, by all accounts, though when I check them, the debt levels seem manageable for the most part. Deficits are needing to be tidied up some time. In the USA, December was a good month and the deficit went away, [unless I misunderstood the information], perhaps temporarily.
Meanwhile, our great, estimable leader, Uncle Al KBE, is about to be replaced by Big Ben at the end of the month, having maintained the USD as the world's preeminent currency for a couple of decades despite the several major challenges to stability. I liked this comment, from 1999, <"I would not only reappoint Mr. Greenspan," McCain said, "if Mr. Greenspan should happen to die — God forbid — I would do like we did in the movie, 'Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could.">
$20 is doable without batting an eye! If you don't like $38, you really wouldn't like $20. Apart from the market overall, QCOM's P:E at 38 is too expensive for my taste. I'd rather wait and see the whites of the subscribers' eyes before bidding that much. I know billions of them should be coming in the doors demanding QCOM products and services, but customers are ornery creatures, which don't necessarily do as expected. I like P:Es in the 15 area [or better still, around 10, with dividends being paid in big dollops].
Allowing that QCOM will enjoy very rapid growth over a decade, as 3G/OFDM increasingly is accepted, a P:E near 20 would be fair enough. Or even 30. But 40? We're spending heaps on R&D, which is good, but we need to see profits and dividends growing to match and they have not been growing at phenomenal rates. ww3.ics.adp.com
It might take a few years to get to $2 a share diluted net income [and that assumes nothing too dumb or unlucky or malicious happens].
Meanwhile, that's a nice stack of cash $10bn sitting around earning higher returns.
Mqurice |
