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

To: Kayaker who wrote (45804)	10/22/1999 3:35:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 152472

To: marginmike (2605 ) From: Ruffian Friday, Oct 22 1999 3:13PM ET Reply # of 2607 Goldman raises Q> Goldman Sachs raises QCOM to $250 by: MicroeTech (31/M/Carlsbad, CA) 45012 of 45012 October 22, 1999 1:18 PM Goldman: Qualcomm Is a Step Away By Megan E. Lundin GOLDMAN SACHS raised its Qualcomm (QCOM) share-price target by $50 (that's right, $50), to $250 today, after the company said it would get rid of its wireless-handset business. That will let Qualcomm focus on its profitable code division multiple access (CDMA) technology -- an industry standard for mobile communications -- and create a new customer out of the handset unit. "Potential accretion from the sale of the handset business (our conservative estimate is 10-15%), solid quarterly results and a strong outlook for CDMA -- the fastest growing wireless standard in history -- should be positive catalysts for the stock," writes Goldman analyst Ajay Diwan in a note issued this morning. Qualcomm stock closed yesterday at about $215, having already zipped past Goldman's previous share-price target. It's not cheap at 54 times 1999 earnings, but there are plenty of reasons to buy it anyway, Goldman says. Diwan explains in his note that Qualcomm should be valued as a fabulous semiconductor company -- with potential to trade in the 50- to 70-times-earnings range. In mid-September Qualcomm announced that fourth-quarter results were likely to meet or exceed estimates. The First Call/Thomson Financial consensus calls for 87 cents a share. The report will be out Nov. 2. Why is the handset divestiture so important? Diwan explains that Qualcomm currently doesn't recognize revenue or CDMA royalties from ASIC chips used in its own phones. But a purchaser of Qualcomm's handset business would instantly become a new ASIC customer that pays royalties on the value of the phones it ships. The greater the ability the purchaser has to ship high volumes of handsets, the greater the earnings potential will be for Qualcomm. The company's goal is to announce a buyer before year's end. Diwan points out that there's plenty of risk here. A delay could expose the stock to volatility as investors become impatient and concerns resurface about conditions in the handset business. There's also the risk that a would-be purchaser can't sell enough additional phones to have a meaningful impact on Qualcomm's earnings. But Goldman is sanguine that the company can get a deal done and predicts the impact would be a 10% to 15% addition to its current fiscal estimate of $3.85 a share. The picture will be clearer when Qualcomm reports fourth-quarter earnings and reveals for the first time detailed results from its different business segments. Goldman predicts that when the business is broken out, the ASIC business (45% operating margin) will be extremely lucrative and the handset business (2.5% operating margin) barely profitable.

To: Kayaker who wrote (45804)	10/22/1999 3:36:00 PM
From: Poet	Read Replies (1) \| Respond to of 152472

I sold a bunch of calls this morning too, at 223 or so, now buying Jan calls. We're just retracing a bit. Not to worry.