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

To: rel4490 who wrote (39835)	9/5/1999 5:25:00 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 152472

We continue to believe that Qualcom is currently evaluating alternatives to exit this business In the past year QC has exited an operator business and infra. Handset exit would be the next logical move, IMHO. While operator biz, infra, and handsets may have been justified on a "grow the market" basis in the past, going forward, as other players enter the value chain, it will be to QC's benefit to focus increasingly on core competencies of ASICs and CDMA IPR. While handsets may not be a drag on earnings in the absolute sense--in that they add incremental earnings as opposed to adding a loss--they ARE a drag on the PE in that they significantly increase capital expenditures, resulting in lower return on invested capital (ROIC). High ROIC is why DELL and MSFT can trade at such high multiples. On an absolute basis, INTC outearns and outsells MSFT, but MSFT has almost a $500BB market cap vs. INTC's <$300BB. I personally would rather see QC valued like MSFT than INTC--that would definitely benefit shareholders. "Grow the market" may continue to justify handsets in the short term, but yielding to a horizontal market in the long term should provide a higher stock price and avoid the difficulty of QC's having to compete with its (ASIC) customers in the handset biz. JMHO