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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: swisstrader who wrote (54011)	12/30/1999 12:06:00 PM
From: Jack Hartmann	Respond to of 108040

Briefing.com view of IDC/QCOM this morning. Qualcomm (QCOM) 659 : Easily the most fascinating stock of the year. It used to be that a tech stock that doubled in a year was the goal. QCOM has set the mark at 10 times or more in a year. Mere doubles just aren't worth bragging about any more. Premarket trading shows QCOM crossing the wire at $740, up $70, or an additional 15% on the day (or 30 times its price of a year ago). With so many stock charts showing a huge spike at the right hand side of the chart, Qualcomm simply doesn't stop rising. But unlike many of the high risers this week, QCOM actually has some business justification behind it. CDMA patents and a move to a more leveraged model make it very attractive. And even at these high levels, QCOM only has a Price/Sales ratio of 30. But, ironically, everyone seems to be just discovering another company, called Interdigital (IDC) which owns patents on CDMA technology. Qualcomm licensed patents from IDC, and then in turn is licensing those same rights to other companies. Who owns CDMA? The truth is we don't really know. CDMA isn't a single patent. But IDC is a company with just $99 million in revenue. Any explosion in CDMA patent royalties would benefit IDC right? Don't make that assumption without understanding the IDC/QCOM deal, something we haven't investigated yet. But CDMA is already booming, and IDC's revenues are "all over the map" as we say. They clearly aren't directly correlated to a growth in CDMA phones. Nevertheless, since everyone on TV and other places are starting to call IDC the "baby Qualcomm" IDC stock has begun to trade in sympathy with QCOM. The problem we have with all of this is that QCOM the stock is beginning to be disconnected with Qualcomm the company. We love Qualcomm the company. But when QCOM the stock does reach $1,000 (which will be January 4 at this pace), then the stock should be sold, if you buy the investment premise behind Paine Webber's $1,000 12-month target. After all, if it reaches the premise without ever having to execute on the business growth behind the premise, why wait around? This is the great enigma of the current market. Future promise is being fulfilled in stocks long before it is being fulfilled in the underlying business. Investors are stepping aside, giving momentum players the wheel. It would be a shame to have that happen to Qualcomm, because it is a great technology company. - RVG I think IDC will get a pull back, but hard to say what level. Jack