Pierre, Ramsey and all San Diego fast laners (very cute with the italic stuff by the way, but it's like the flashing 12:00 on my VCR: can't do it so can't retaliate) except that your secrets are out:
Subject: Re: Annual meeting
Date: Thu, Feb 12, 1998 14:11 EST
From: Amycomp
Message-id: <19980212191100.OAA15283@ladder03.news.aol.com>
Previous post summarizes infrastructure questions.
On a more general note: QCOM's products are certainly exciting. FYI the company holds 158 US patents and has 390 pending. Went up to Mr. Jacobs and shook his hand. Nice guy -- he actually tried to answer my capex question on the spot. (Yes, there will be more capex, especially outside the US ... interesting). Looked like much of the crowd was well-to-do locals from La Jolla. (Let's do the QCOM shareholders meeting and then the country club for
lunch.) After the meeting a few people from the SI board came up to me to invite me to join them for lunch. (They liked my questions.) They were very hospitable group, primarily tech-related. We had a wonderful Chinese banquet and some good conversation (mostly about how good QCOM's technological prospects are). Thanks SI folks--a real pleasure to meet you! I may register on SI soon.
I spoke with someone from the ASICs group trying to devine whether there could be an inventory problem with the items originally scheduled for Korea. No tangible answer, but he said the key is to know which generation of MSM (ASIC) was scheduled to go. Also, I believe (but cannot be sure) that phones scheduled for Korea will need a little adjustment (maybe replacement of RF chip, not MSM -- there are 3 different chips in the phones) for shipment
elsewhere. He was a little cagey, but my gut says that there would be some incremental cost to preparing those phones for US shipment. More possible margin implications.
Renby, where were you? I was looking for a guy with a backwards baseball cap.
Well, I am moving to the sidelines for now. Can't get past the downside vs. the upside in the short (6mos-1 year) term. Even lunch with SI did not dissuade me. I feel (granted, this is MHO) that while the technology is compelling, the business/valuation issues are more pressing at this point. I am putting the technology in second place for now relative to the financials. As a side note, for the entire weekend of Jan31, my husband was on my case
about the valuation (ROE, leverage, capex requirements) stating that it looked to him like there was a downside risk of the mid-to-low 30s if there was any bad news. (It was not a pretty "discussion".) We sold some into the rally into the mid-50s because of his discomfort. Then QCOM had the Korean surprise and, even worse, probable compression of handset margins, which QCOM had targeted to increase to industry levels. (Smart guy, my husband -- I'm
doing the dinner dishes and polishing his shoes for the next year.)
That was enough for us in the short term--the numbers don't make good investing sense to us at this point. Call me a heretic but I unfortunately believe that, as Renby alluded to, it will probably be possible to get back in at lower levels. Perhaps someone would be willing to buy QCOM but I suggest that someone run the numbers on potential value before you begin to rely on that as a takeout. Good luck to all. I'll be watching.
So, you were 'hospitable' had 'wonderful conversation' and now it ain't pot stickers but a 'Chinese banquet'? But by far the worst, you 'liked her questions'. Yeah right. Admittedly, the Q had been hammered, the memory of Black Thursday all too fresh, and you were depressed--but is chivalry really so dead? Pierre, I cannot but note the national connotation of your name and the romantic tradition represented thereby. I am well and truly ashamed to be even Cyber-associated with the lot of you--note her marital status gentlemen!
Where's my friend, chuckj? With deep regret, Surfer Mike
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