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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

QCOM 156.34

+1.4%

Jan 21 3:59 PM EST

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To: David E. Taylor who wrote (80684)	9/30/2008 12:09:06 PM
From: JGoren	4 Recommendations Read Replies (1) of 197306

Deutsche Bank report, 9/29 at 4 PM PDT: Qualcomm offers some resilience in difficult economic times Despite exposure to macroeconomic conditions underlying growth remains significant. “Worst case" shows 11% earnings dilution. Its model reduces CY09 CDMA growth rate to 0% and took WCDMA growth to 30% (DB currently modeling up 4% and 41%respectively). Thus, Qcom's revenues and earnings would fall by 6% from current est. However, if CDMA units decline by 5% and WCDMA grows only 20%, earnings would decline by 11%--assuming no change in operating expenses. Upside not fully reflected DB says its numbers might be conservative. Model assumes 2% royalty from Nokia (vs. industry rate of 4%). Each 50bps of royalty rate adds 2.5% to earnings (excluding any upfront payments). Model assumes QCT 36% market share but DB believes Qcom could increase closer to 40% in CY09. Each 2% of share can add 2.5% to EPS. Oversold despite general economic concerns Believes Qcom remains undervalued at current levels. It's now trading at 15X CY09 earnings. Even DB's "worst case" scenario, the stock is trading 17x and would still generate $2.52/share in free cash in CY09. The company has $11.1 bn in cash ($6.36/share), ex-cash and interest the stock is trading at 14x CY09 earnings. Maintain Buy rating with target at 70.

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