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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: 100cfm who wrote (9434)	11/2/1999 11:06:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

For me, the only valid comparison of Qualcomm's R&D expenses is to compare Q3 pro forma R&D with Q4 R&D, relative to revenue of course. Though we have some information on a consolidated basis about Q3 pro forma numbers, we don't have the detail about R&D. It might be in the Q3 10k, but I haven't taken the time to look at it. I wouldn't be surprised nor upset if it's not in the 10k. Moreover, since Q's gorilladom is only in the CDMA space (I think), the interest in the R&D would be those expenses dedicated only toward CDMA. I don't think we'll ever see that kind of detail in a P&L statement. Symptoms of the tornado: "Qualcomm ... said it had shipped 14 million chips in the quarter -- nearly three times as many as a year ago." "The company took in $113 million in royalties in the fourth quarter, up from $52 million a year ago." (That's a 117% increase.) Symptoms of improving margins: "Royalties now make up 11 percent of revenue. A year ago, they accounted for 6 percent." (The percentage will be even higher once the handset division is sold.) "Operating income as a percent of revenues more than doubled, increasing to 24 percent for the fourth quarter of fiscal 1999, excluding non-recurring charges, from 9 percent in the year ago period." (I expect operating margins also to improve when the handset division is sold.) That's already far too much financial analysis considering that a gorilla thread really only focuses on the revenue and the product adoption. --Mike Buckley P. S. Can't wait to see the next update of worldwide CDMA subcribers.