Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.01

-0.3%

Nov 14 9:30 AM EST

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To: marginmike who wrote (24685)	3/22/1999 10:25:00 PM
From: Keith Feral	Read Replies (2) of 152472

Mike: Speculation about a buyout is being driven by ERICY who is desperate to prop their stock. As for QCOM, I would like to refer to the report by Forward Concepts last year. They reported that CDMA handset sales would reach $19 Billion annually by 2003. Let's take a 7% royalty rate for QCOM - $1.3 Billion. Do you have any idea what the EPS would be today with only 70 million shares outstanding? Royalties alone would genrate almost $20 a share in EPS in 2003. Just for fun, let's throw a PE of 30 on $20. That yields a price target of $600 per share by 2003. I think Maurice's projection that QCOM will hit $200 per share by the end of the year is very likely. I would like to start another side bet. How many stock splits will shareholders receive in the next 2 years? I am betting that the stock will split 3 times between now and the end of 2000. I think the first one will come after the earnings announcement on April 20th. As for CSCO, I'll bet they would just love to acquire QCOM. Who wouldn't? QCOM better split the stock and get the market cap up to $10 billion before any offer would begin to look appealing. 2.5 times revenues would still be a steal for a company like CSCO or MSFT looking to buy growth. Typically, 3 to 5 times sales is the norm for a high growth company. QCOM is currently ranked as the 3rd highest growth company in the US. Ultimately, an appropriate M & A model for a buyout should fetch $12 to $20 billion in market cap for the current shareholders. One important thing to keep in mind, the current share price of QCOM means nothing condisering the fact there are only 70 million shares outstanding. As of today, the Price to sales model is about 1.5 times FY 99 revenue projection. I would not think the bidding for QCOM could reasonable take place below $180 per share. Top end bids could fetch as high as $270 per share.

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