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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 173.20-3.3%Nov 6 3:59 PM EST
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To: Jacob Snyder who wrote (91466)5/20/2010 3:08:20 PM
From: Jacob Snyder3 Recommendations  Read Replies (2) of 196538
 
re: 5Y EPS growth:

Using non-GAAP earnings, to compare 2005 with 2010, is not apples-to-apples, because QCOM changes the definition of "non-GAAP" all the time. The only possible apples-to-apples comparison uses GAAP.

The company, and unfortunately the analyst herd as well, and business journalists, mostly use the bogus infinitely-flexible non-GAAP numbers. Just like the company trumpets the number of shares they are buying back, while burying the fact that share count isn't decreasing. When was the last time you saw a headline saying, "QCOM Share Count Barely Changed Last 5 Years"?

It will be easy to grow non-GAAP EPS by 15%/Y, going forward. All that is required is:
1. continuing creativity in the definition of non-GAAP
2. continuing credulity by investors, analysts, and journalists

Growing GAAP EPS at 15%/Y will be a lot harder.

QCOM PE: 14 = (36-11)/1.77 = (stock price - net cash/share)/EPS GAAP 2010

A PE of 14 is not a screaming value, but it's fair for a company growing EPS at 8%/Y.

I'm letting my irrational exuberance run wild, by using 2010 EPS. If I wanted to be conservative, I'd use trailing 12 months EPS. I hope I'm not offending all the careful value investors on this board.
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