Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 176.67

-1.4%

3:42 PM EST

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From: peterk	10/2/2006 1:32:43 PM
	Read Replies (2) of 152472

Not being an attorney I will not attempt to venture on the merits of the upcoming cases. However as an investor who has been involved in the markets for over 30 years I find the discussion surrounding Qualcomm fascinating. Naturally when a stock loses over 25% of its value in a relatively brief period questions should arise concerning the viability of the company. Jim, Slacker, Brational,etc. have all contributed to the underlying fundamentals and there is no need to rehash here. Obviously there are two sides to the Qualcomm saga. The doomsayers and the optimists. The doomsayers believe that Qualcomm's business model is no longer valid because of the recent lawsuits. On the other hand the optimists believe that this is a bump in the road which will be resolved in Qualcomm's favor. Both sides can't be right. I like to view this by looking at the pros and cons to Qualcomm if they win or lose these upcoming cases. Everyone on this board has done a pretty thorough job of articulating the pros and cons so what remains are the decisions themselves. It is my opinion that based on the information we have that if Qualcomm loses all cases and in addition doesn't come to an agreement with Nokia the stock could very easily break 30 and trade in the mid to upper 20's. On the other hand if Qualcomm is successful in the cases and signs an agreement with Nokia then I believe Qualcomm will trade near the industry PE which is 46. So, what should an investor do? There are a number of strategies that can be employed. Be long or short the stock. Be long the stock and buy deep out of the money puts. Be short the stock and buy deep out of the money calls. Writing strategies do not appear to very attractive at these levels, etc. The question then is what is the best strategy. Based on the fact that companies thought it to be in their best interests to sue Qualcomm tells me a great deal. It tells me that they cannot compete with Qualcomm. They need to change the level of the playing field. They have tried but are coming to the realization that they are to far behind and need help from the courts to slow Qualcomm's huge advantage. The catalysts if Qualcomm is successful will propel the stock way beyond the current annual high. If Qualcomm loses they take another 30% cut in price. Each investor needs to determine for themselves, based on their own unique circumstances what strategy they should employ. However, if one can risk 30% of their capital or less they upside potential will be huge.

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