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

To: kech who wrote (3522)	11/23/1999 3:14:00 PM
From: Stu R	Respond to of 13582

Unfortunately, equity analysts are expected to divine the future price of a stock with enough precision to actually fix a price and time frame (usually no more than 18 months). However, they can change their call whenever they want to. Wasn't it 2 weeks ago an analyst changed his target twice in one week? I don't think anybody can be expected to predict with consistent accuracy future price movement. Since Cena must produce a target I think he chose a simple relative valuation measure to express the potential future value of the company (namely higher)while not intending for it to represent "the" value of the company. Savvy investors and valuation expects do not value companies based on a multiple of revenues. Valuation is done based on earnings and/or cash flow. I think Cena's target number (whatever it is) is just a number and has little value other than to support his obvious bullishness in the prospects for the future of Q. That being said, if I were interested in resolving the issue of whether the target price should be calculated using diluted or undiluted shares I would first go back to Cena's original premise of comparable industry company valuations being 30X revenues. I would select for myself the company's I believed to be comparable and would find out what multiple of revenues they are and then calculate it 2 ways using diluted and undiluted for each comp. company. Since I think it is an exercise in futility I will leave it to some other interested person to do. Stu

To: kech who wrote (3522)	11/23/1999 3:17:00 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 13582

I don't think it is incorrect to say that QCOM's market cap is based on 165 million shares outstanding. I think market cap is generally based on these shares only. That is not to say other obligations should be ignored, but they are called other things. The larger figure (obtained using 194mm shares), including options and converts and so on, sounds more like enterprise value, which would also add in debt and cash. I think a lot of big-cap companies have disparities like this (look at MSFT), but the market cap figure is typically based on shares outstanding. Assuming this is what Cena meant (I think it is), then you would say current market cap is 60bil (for 165 mil shares, not 194mil), so you could obtain per-share forecast by multiplying the current share price by 1.25, i.e., about 450 a share.