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

To: Jon Koplik who wrote (50844)	11/18/1999 8:58:00 AM
From: Jon Koplik	Read Replies (1) \| Respond to of 152472

Text of WSJ "Heard on the Net" piece on Qualcomm. November 18, 1999 Overheard: Profit-Taking Hurts Qualcomm But Investors Are Still Upbeat By CARRIE LEE THE WALL STREET JOURNAL INTERACTIVE EDITION An 18% drop in a company's stock over two days would normally incite panic on Internet message boards. But many message-board participants are taking this week's skid by Qualcomm Inc. in stride. Shares of the San Diego wireless communications company closed at 342 7/8 Wednesday on the Nasdaq Stock Market -- down 63 1/4 from its record high of 406 1/8 on Monday. Analysts say there are no fundamental reasons behind the sell-off, blaming it on a bout of profit-taking in a highflying stock that had doubled in the past month. The shares traded at 27 about a year ago. Want to receive an e-mail alert when Heard o n the Net columns are published? See details on how to subscribe. The recent surge was fueled by the company's healthy profits and a plan to jettison its money-losing business that makes mobile phones and focus on developing the technology and selling components -- booming areas. Not surprising, many investors see even fatter profits ahead and continued gains in the company's stock price. They view this week's dip as a temporary blip and an opportunity to buy the stock at a cheapened price. "OK I'm in at 342 and ready to ride. Pull the lever marked UP," one poster wrote Wednesday on a Silicon Investor board (www.techstocks.com). "No Problem. ...The stock will come back just don't be foolish and sell," wrote another. Pete Peterson, an analyst at Volpe Brown Whelan & Co. in San Francisco, said while the drop in the stock seemed unprovoked and deep, it wasn't surprising given the recent surge. "That sets up the scenario for profit taking," he said. Officials from Qualcomm couldn't immediately be reached by telephone late Wednesday for comment. The company's shares, which traded below 200 in October, have been on a tear since Qualcomm posted a fiscal fourth-quarter profit above expectations in early November. It earned $136 million, or 73 cents a share, up from $39.9 million, or 27 cents, a year ago. Revenue rose 14% to $1.06 billion. Qualcomm cited a booming market for its mobile-phone technology. It also said it would sell its mobile-phone manufacturing unit. The sale of the handset division, which is expected to close during the first quarter of next year, is expected to dramatically improve Qualcomm's profit margins. The company will instead focus on making components for wireless digital phones as well as developing and licensing technology to other companies. Qualcomm pioneered the latest wireless digital technology, which is being used in many next-generation mobile-phone networks. But analysts have differing opinions about what to expect as the company transforms itself. "The whole story about the handset division being sold, investors are trying to figure out to value it," said Mark McKechnie, an analyst with Banc of America Securities in San Francisco. "It changes the fundamentals of the company from a major equipment supplier to more of a technology component supplier." Some analysts are confident that the stock will keep doing well. "Overall the stock will continue to move up, but we will see some volatility which has been a part of the Qualcomm story for years as its value continues to be tested," says Mr. Peterson, who has a buy rating on the stock. "In this new [cellular] environment technology paces very fast, the technology innovator has a very important role. This is a very dynamic communications technology play." Others say Qualcomm's highflying days may be over for a while. David Heger, an analyst at A.G. Edwards in St. Louis, has a "maintain" rating on the stock and a 12-month price target of $270. "At some point [shares] will settle out, unlike most Internet companies, Qualcomm has very solid earnings growth, that will help create a cushion on the downside." Copyright ¸ 1999 Dow Jones & Company, Inc. All Rights Reserved.