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

To: John Hayman who wrote (37580)	8/3/1999 4:04:00 PM
From: LBstocks	Read Replies (2) \| Respond to of 152472

Full text of Salomon Smith Barney comments: QCOM: MOT Entry Into CDMA ASICs a Positive, NOT a Negative to QCOM Salomon Smith Barney Tuesday, August 03, 1999 -------------------------------------------------------------------------------- --SUMMARY:--QUALCOMM, Inc.--Telecommunications Equipment MOT, which has been paying QCOM royalty fees on its CDMA infra & handset sales, could soon make CDMA ASICs, adding yet another royalty stream to QCOM. In fact, MOT announced today it would make CDMA chipsets. * We believe MOT's potential entry into the CDMA ASIC marketplace could potentially be a boon for QCOM for several reasons: (1) Most, if not all, 3G phones will be CDMA based; (2) 5 Billion mobile phones could be sold over the next 5 years; (3) There's 2 1/2x more mobile phones sold today than PCs; (4) QCOM alone cannot supply the entire ASIC marketplace; (5) ASIC mkt reqs met by other manufacturers ALL result in royalty fees to QCOM * Believe this is a big POSITIVE for QCOM, not negative, which may be initial reaction. Rate QCOM a 1H with $210 price target; would be buyers of stock on weakness. --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/98 EPS $0.29A $0.13A $0.14A $0.27A $0.82A Previous 09/99 EPS $0.30A $0.41A $0.75E $0.90E $2.40E Current 09/99 EPS $0.30A $0.41A $0.75E $0.90E $2.40E Previous 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Current 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Previous 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Current 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (8/2/99)......:$152.50 P/E Ratio 09/99.....:63.5x Target Price..:$210.00 Prior:No Change P/E Ratio 09/00.....:38.1x Proj.5yr EPS Grth...:44.4% Return on Eqty 98...:48.9% Book Value/Shr(99)..:7.01 LT Debt-to-Capital(a)0.2% Dividend............:$N/A Revenue (99)........:3649.00mil Yield...............:N/A% Shares Outstanding..:159.0mil Convertible.........:No Mkt. Capitalization.:24247.5mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION:------------------------------------------------------------------ Motorola, which has already been paying QUALCOMM royalty fees on its CDMA infrastructure and handset sales, will soon be manufacturing CDMA ASICs, adding yet another royalty stream to QCOM. In fact, today, Motorola announced at its analyst meeting that it would be manufacturing CDMA ASICs (chipsets) as well as the CDMA phones and network gear it currently makes. We believe MOT's potential entry into the CDMA ASIC marketplace could potentially be a boon for QCOM for several reasons: --Most, if not all, 3G phones will be CDMA based --5 Billion mobile phones could be sold over the next 5 years --There's 2 1/2x more mobile phones sold today than PCs --QCOM alone cannot supply the entire ASIC marketplace --ASIC market requirements met by other manufacturers ALL result in royalty fees to QCOM Motorola and Lucent are the only two manufacturers whose licensing agreements with QCOM permit them to manufacture and sell CDMA ASICs for sales outside of their own internal consumption. QCOM has also licensed other manufacturers to produce CDMA ASICs for use in mobile phones. These companies include VLSI, DSP, AKM and PrarieComm. MOT's entry into the CDMA ASIC market is more likely an issue for other ASIC manufacturers than for QCOM, which is currently the leading supplier of CDMA ASICs and likely to remain the leading supplier even as other sources enter the market due to its head start and core technology expertise. MOT's potential ASIC entry is a big POSITIVE for QCOM, not a negative, which may be the initial reaction. We continue to rate QCOM a 1H with a $210 price target and would be buyers of the stock on weakness.