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

To: Wyätt Gwyön who wrote (58202)	12/30/1999 3:31:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 152472

MM, Try this for a first cut: according to SEC filings QCOM had free cash flow of $.619/basic share. Now let's assume that FCF grows at 35% p.a. for 20 years. That makes FCF $250/share. Applying a reasonable terminal value of 12x (after all, at the end of 20 years we would expect the company to be mature) I come up with $3,000 per share, plus cash on hand of $835. So let's say that the shares would be worth around $4,000. Applying a 26.5% discount rate gives me a PV of $36.33 Now let's try the same exercise at 45%. The terminal value including COH would be $19,364, and at a 26.5% discount rate I get a PV of $176 per share. Now let's try 50% growth. The PV comes to $377. The point is that the current price assumes that the future of the company is certain. My challenge is still open: show me how you can justify QCOM's market price. CTC