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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Terrapin who wrote (3082)	12/21/1999 8:57:00 AM
From: slacker711	Respond to of 34857

This was published yesterday..... QCOM: Handset Sale Only Days Away; Should Be Big Plus for the Stock! Salomon Smith Barney Monday, December 20, 1999 --SUMMARY:--QUALCOMM, Inc.--Telecommunications Equipment * Expect an announcement this week * Top tier manufacturers involved and so are 2nd tier players * Speculation is R&D goes to Nokia & manufacturing goes to the Japanese; viewed very positive and in our opinion the most likely outcome * If neither Motorola nor Nokia involved; viewed negative * If all goes to Nokia or Motorola, viewed positive --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/99 EPS $0.30A $0.41A $0.75A $0.91A $2.47A Previous 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Current 09/00 EPS $N/A $N/A $N/A $N/A $4.00E Previous 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Current 09/01 EPS $N/A $N/A $N/A $N/A $5.30E Previous 09/02 EPS $N/A $N/A $N/A $N/A $N/A Current 09/02 EPS $N/A $N/A $N/A $N/A $N/A Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (12/16/99)....:$439.25 P/E Ratio 09/00.....:109.8x Target Price..:$370.00 Prior:No Change P/E Ratio 09/01.....:82.9x Proj.5yr EPS Grth...:44.4% Return on Eqty 99...:48.9% Book Value/Shr(00)..:9.90 LT Debt-to-Capital(a)0.2% Dividend............:$N/A Revenue (00)........:4163.00mil Yield...............:N/A% Shares Outstanding..:159.0mil Convertible.........:No Mkt. Capitalization.:69840.8mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION:------------------------------------------------------------------ Qualcomm had previously indicated that it planned to announce the divestiture of its handset division by the end of 1999 and would expect the transaction to close sometime around the end of the March quarter. We believe the company is likely to announce something during the week. Qualcomm has already stated that the criteria for selecting its new partner will be based first and foremost on the impact to its customers and employees followed by the strategic value of the relationship. We believe the sales price is the last consideration. Thus, we would be surprised if the sales price was not significantly less than $750 million. There are a number of potential outcomes, including: 1) the sale of the division to one of the top tier mobile manufacturers such as Nokia, Motorola or Ericsson; 2) The sale of the division to a 2nd or 3rd-tier manufacturer; and 3) the sale of the handset division to other electronic manufacturers such as offshore PC companies. A sale to the top tier would be considered a huge positive by the Street given the inherent strategic value that would enable the company to generate incremental ASIC sales as well as potentially acquire certain intellectual property in order for Qualcomm to broaden its reach from CDMAOne to GSM as well. While a sale to a 2nd or 3rd-tier supplier could generate a higher sales price, the relationship would not generate the same enthusiasm because the probability of success by these companies would be less likely. The most likely scenario is a combination of a sale of the Qualcomm's mobile division's research and development group to Nokia, while the actual manufacturing facilities would go to one of the Japanese manufacturers. We believe this outcome should be well received by the financial community. Qualcomm will be able to divest an operation that has been generating an operational loss and gain a foothold for its ASICs into the top mobile phone company in the world. Nokia would be able to capture a team of engineers. This would be a great coup for Nokia since wireless engineers are difficult, at best, to obtain, especially engineers with core competencies in CDMA. For example, Motorola purchased Lucent Technologies' mobile phone group more than a year ago a nd shut down the manufacturing operations, but kept the R&D facilities running. The acquirer of the manufacturing facilities would be able to complement their offshore capabilities with manufacturing capacity in the United States.