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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (1295)	9/6/1999 6:33:00 AM
From: Brian K Crawford	Read Replies (1) \| Respond to of 13582

In summary, my long-winded point is that by any traditional definition of a PEG ratio I've ever seen, your calculation is wrong to the point of being very misleading. OK Mike, you have an opportunity to provide some insight by finishing the lesson... What are the numbers you would plug in? 1. Base earnings and P/E 2. Future earnings growth... I start with the pro forma earnings of $.86 from last quarter for base earnings. Something around $4.00 per share total for EPS thru the next three quarterly periods. (It makes more sense to me to look forward rather than back) I stumble a bit when it comes to estimated future growth rate from this new and far higher earnings base. Do you think 40-50% annual growth for 5 years out is possible? Brian

To: Mike Buckley who wrote (1295)	9/6/1999 10:42:00 AM
From: Keith Feral	Read Replies (2) \| Respond to of 13582

Mike: I don't really try to get in the way of the numbers. The sale of infra clearly changed the valuation model for QCOM, permanently. It was the best piece of financial engineering I have ever witnessed. With a 40% EPS upside in the last fiscal quarter, the company is showing impressive margin expansion. Bottom line, mgmt has made all the right moves. As revenue growth begins to gain momentum with the increase in handset production (especially in the December quarter), the only thing I can see coming our way is more stock splits and big EPS surprises. I think the reveleance of my "current" PEG ratio shows that QCOM is just as cheap as it was a year ago. Going forward, I am more than happy with 40% or 50% growth, as it will reduce my cost base to almost nil over the next couple of years. Using a 40% growth rate, the "forward" PEG is 1. I think you could agree that is very cheap, too.