~OT~ Re: QCOM....IMO, the perception may be changing....QCOM will have to consolidate and grow into its valuation. Yet, the Funds may not stick around and wait for that to happen. The quarterly results will be examined carefully.
Folks love to quote Smith Barney -- of course they haven't been right about DELL for years (it's amazing they just changed their rating on DELL to a BUY). Smith Barney is still ponding the table on QCOM -- my hunch is that they may have too much of it in their Funds <G>...I tend to think QCOM got way ahead of its fundamentals and the Hambrecht & Quist perspective may be more realistic for now. Here is the latest update on Qualcomm...FYI...
<<Qualcomm Falls on Concern 4th Qtr May Disappoint (Update3)
(Updates with closing share price.)
San Diego, Sept. 1 (Bloomberg) -- Shares of Qualcomm Inc., the best-performing stock on the Standard & Poor's 500 Index this year, fell 12 percent on concern that fiscal fourth-quarter profit won't top forecasts by as much as in past quarters.
The developer of the world's second-most popular cellular- phone technology tumbled 23 1/2 to 168 11/16, wiping out $3.77 billion in market value in the biggest drop since April 19. Trading of 24.3 million shares made Qualcomm the second-most active U.S. stock.
Everen Securities Inc. analyst Mark Roberts, who met with management yesterday, said falling prices and a parts shortage may prevent Qualcomm from repeating its performance of the past three quarters, when it topped per-share forecasts by an average of 28 percent. A drop in cell-phone prices has accelerated to as much as 30 percent from 15 percent to 20 percent during the past few quarters, cutting into Qualcomm's profit, Roberts wrote. ''Although the company has substantially beat estimates the last couple quarters, we doubt the company has the ability to exceed fourth-quarter expectations to that same extent,'' Roberts wrote.
Qualcomm declined to comment on the share decline or the meeting with Roberts at its San Diego headquarters. It issued no public statement about its discussions with the analyst.
Roberts expects fourth-quarter earnings of 88 cents a share. Analysts polled by First Call Corp. expect 87 cents for the quarter that ends this month.
In the third quarter, profit rose to $134.9 million, or 75 cents a share, including the sale of a cellular-network division, from $24.7 million, or 17 cents, a year earlier. That beat the 63- cent First Call estimate.
Surge
Qualcomm makes digital cell phones and the chips that run them. It also developed wireless technology called code-division multiple access, or CDMA, the fastest growing standard in the world.
The company's shares have surged more than sixfold this year on demand for its phones and chips and royalties from CDMA, which almost doubled to $93 million in the third quarter from the year- earlier quarter.
About 45 percent of Qualcomm's revenue comes from cell phone sales and 20 percent from its semiconductors, said Ed Snyder, a Hambrecht & Quist LLC analyst, who rates Qualcomm a ''market perform.''
CDMA has caught on because it provides more capacity than competing digital cellular standards and is considered more efficient for data services that let users send and receive e- mail and browse the Internet.
Qualcomm has hoped to benefit from the potential for the technology in China, the world's most populous country. Roberts, however, wrote that in his meeting with company management, Chief Executive Irwin Jacobs ''was more cautious than we would have expected regarding the rollout of CDMA in China.''
Analyst Snyder said that China hasn't played a big part in Qualcomm's revenue, but ''the stock's run-up had expectations for China built in. At this valuation, everything has to work right.''
Competition
Competition from Finland's Nokia Oyj, the No. 1 cell-phone maker, and No. 2 Motorola Inc. also is putting pressure on Qualcomm, Snyder said.
In the first quarter, Qualcomm had a 14.8 percent share of the U.S. market for digital cell phones, while Schaumburg, Illinois-based Motorola had 11.2 percent, according to market research firm Dataquest. Motorola was late in adopting digital technology, but has been catching up, analysts said.
Nokia, which knocked Motorola out of the No. 1 spot with new digital phones, is going after the U.S. market. Today, it said it won a $40 million order to supply CDMA cell phones to US West Inc. ''Nokia and Motorola, the big boys, are coming into this market,'' Snyder said. Every time someone buys a competitor's phone, Qualcomm loses twice: once on the phone and once on the chips, he said. ''Qualcomm is a great company, but the growth won't be as great as in the past couple of quarters,'' Snyder said. ''It can't be, not with Nokia and Motorola pushing prices down.'' >> |
