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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (34143)	7/7/1999 1:04:00 AM
From: djane	Respond to of 152472

Q* on Upside List. 20 Most Inflated Tech Stocks [Don't blame the messenger. I've been long the mighty Q* (sadly in relatively small quantities) for a couple years. djane] upsidetoday.com page 8: Priceline and Qualcomm PRICELINE.COM INC. Priceline is a standout both because of its high valuation and the uncertainty of its name-your-price business model. Thanks to its William Shatner-narrated ads and successful March 30 IPO, the way Priceline works is by now quite well-known. Customers submit a lowball bid for, say, airline tickets, and if the seats are available, the sale goes through. It's a cheap way for airlines or other businesses to unload excess inventory like seats on a red-eye flight, so customers only interested in price can benefit. And Priceline has expanded into hotel reservations, home mortgages and cars. Yes, it's a compelling model with real potential. The problem: As of July 1, the company's market capitalization was $15.2 billion, more than twice that of Delta Air Lines Inc. That's absurd, given how rough it is to compete solely on price in the Net marketplace. Even the biggest fans of Internet stocks would agree, contending that Amazon.com will succeed precisely because it doesn't compete on price alone. Priceline's business, which has yet to stand the test of even Internet time, has somehow earned a large premium. Merrill Lynch & Co. analyst Henry Blodget, who is very bullish on Priceline, expects its revenue to be $450 million in 2000. By that measure, Priceline trades at 38 times 2000 revenue, while other e-commerce stocks trade at 10 to 20 times. Another relevant statistic: Only about 35 percent of the bids Priceline deems "reasonable" actually result in sales. That means reliability isn't a selling point, a factor that makes competing on price even harder. Unlike Amazon.com, Priceline offers no first-class service or cachet on which to build brand loyalty. As Priceline expands into other markets, it will run up against other Net franchises competing on price, like Buy.com Inc. or Beyond.com Corp. So what's this company really worth? Name your price. QUALCOMM INC. Wireless communications provider Qualcomm only recently qualified for this list. The stock's ascent began on March 25, when Sweden's LM Ericsson Telephone Co. settled its patent dispute with the company and agreed to support Qualcomm's wireless phone technology. Ericsson also agreed to buy Qualcomm's money-losing wireless infrastructure unit. Over the next four weeks, Qualcomm's stock price soared 121 percent, as analysts' earnings estimates for 2000 rose just 50 percent. That means the price-to-earnings ratio on that number increased above 45. Qualcomm could well earn that high multiple over time, but investors ought to wait before adding this stock to the pantheon of superachievers. Next Page \| Sun, Value America and Yahoo Print this story The 20 Most Inflated Tech Stocks page 1: 20 Most Inflated Tech Stocks page 2: Traits in Common page 3: Amazon and AOL page 4: Ameritrade, @Home and Broadcom page 5: Cisco, CMGI and Dell page 6: EBay, EMC and IVillage page 7: Level 3, Lucent, Macromedia and Microsoft page 8: Priceline and Qualcomm page 9: Sun, Value America and Yahoo sidebar: Defending Pricey Tech Stocks sidebar: Twenty Very Expensive Stocks