not one of the skeptics ever responds to such an enlighten article but is quick to critize Q
"eyes wide open all the time"
- J. Cash
Goldman:
Nov 15, 2007 Upbeat Analyst Day; Resolution of key legal issues expected
2008
WHAT'S CHANGED: Qualcomm hosted an analyst day in New York providing an
overview of the key drivers in its 2008 outlook as well as an update on the current legal
landscape surrounding Nokia, Broadcom, and the EU. Following today’s updated
guidance, we are reducing our FY2008 EPS x ESO estimate to $2.04 from $2.10 ($0.02
due to acquisition, remainder due to stronger than expected negative impact from
litigation/Nokia and slightly lower QCT margins). Our FY2009 and FY2010 EPS
estimates remain unchanged.
IMPLICATIONS: Our bottom line message is that we continue to remain buyers of
QCOM shares as we believe investors will be paid to wait out the legal battle. 1) We
expect to see a reacceleration on CDMA demand over the next several years,
particularly in developing countries such as Africa, India, Indonesia, and Malaysia. 2)
Additionally, we expect WCDMA demand to be strong in all regions (Europe, Asia,
and ROW) for CY2008. 3) Qualcomm’s chipset business remains well positioned to
continue to gain 3G market share given breadth of portfolio, including single mode 3G
chips and multimode chips for all tiers of the market. In particular, management
believes that low cost single mode 3G chips will encourage greater smartphone device
diversity in the mid tier ($100 to $150 range) starting in late CY2008. 4) We believe
that the legal battle over the coming quarters will move more in QCOM's favor. Recent
wins in European courts vs. Nokia are noteworthy. We expect QCOM to gain
considerable leverage as it makes progress on enforcing its GSM patents in several
courts around the world.
VALUATION: Our 12-month price target of $58 is based on 24X CY2009 EPS
(ex-ESOs) of $2.39, supported by QCOM’s high profitability and strong cash
generation.
the analyst primarily responsible
for such report as follows: I,
hereby certify
that all of the views expressed in
this report accurately reflect my
personal views about the subject
company or companies and its or
their securities. I also certify that
no part of my compensation was,
is, or will be, directly or indirectly,
related to the specific
recommendations or views
expressed in this report. |
