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

To: Michael Kucera who wrote (64844)	1/27/2000 9:32:00 PM
From: John Meares	Respond to of 152472

From Raging Bull: Godzilla (the movie) and Q Last night after the conference call, I watch Godzilla (the remake, not our friend on this board) and started wondering how the market who react after Godzilla had trashed Wall Street. The reaction: a panic sell off followed by a real big buying opportunity for the big money players. So what's going on? Afraid I don't have time today to review some 200+ post so what I will say may have already been said. From the context of my 18903 post. The earnings were good but not good enough to start confirming raised expectations for some folks. One cent above estimate isn't enough. Plus there was no big news like a China or GSM IP deal. Plus the warning about the MarchQ. Under current market conditions, these items were insufficent to support Q's current price for speculators. The initial broker reaction was predictable: namely somewhat muted positive remarks and reitierations of recommendations plus some ST downgrades based on valuation. Here's some: ...CS First Boston: reiterates Buy, sets FY2001 at $1.27; ...Mark Roberts at First Boston reiterates Strong Buy, raises 2000 ESP from 1.00 to 1.07. ...Merrill cuts NT to neutral (that means sell) based on valuation from accumulate, LT remains BUY. ...JP Morgan raises target price to 170 from 145 (that's a positive) ...DB Alex Brown raises target from 130 to 150 (that's pretty negative). (I hope the above are accurate, I haven't confirmed the info yet; nor have I had time to look for more). So Q sells off based on the above. And Q sells of BIG TIME because I believe most people, including myself, are surprised about the Snap-Track deal. My initial reaction was: there goes the Handset proceeds & thensome. After I heard that it $1 bil in stock, my initial reaction was there goes the 2:1 split (not true for obvious reasons). Underlying this, I believe the financial community also is a bit surprised by this move. Most everyone figured Q would make acquisitions with the cash from the handset ops and maybe some more with the unreserved and unissued shares but some heads are a-scratching over Q's direction because I believe most people in the financial community were looking for a more fundamental move in the chip making area, perhaps something related to GSM. I'm not saying Snap-Track is a bad move -- frankly I don't know much about it yet. I'm simply saying that it is somewhat unexpected and since the market doesn't like to be surprised plus it usually trades down buyers in acquisitions, this news, added to the above about earnings and expectations, is fueling a panic sell off. Long term holders know that Dec99 Q results were pretty good. A really bright light shining here is licensing at $144 mil, +224% over last quarter and more importantly, that was 10-15% or so over some benchmark estimates for the DecQ. See eg Cena who forecasted $125 mil. Long term holders know that the next Q "slowdown" is no big deal and that it is a LT positive because it will include a transition to new chipsets. Long term holders believe that Q will meet/exceed MarchQ estimates of 25 cents. By how much? My hunch is 1 cents right now - that is to say my guesstimate for KYO licensing payments from Feb 20 to end of March. All this having been said now, I won't try to fool anyone. Today's dump is nasty. I thought we might test 130 before I heard about Snap-Track. Instead we have testing Q's 50-day moving average (say 120)and that is significant. The last time we did that was at the bottom of the Sept 1 panic sell-off, not at the beginning of a panic sell off. Considering how very weak Q has traded all month, we may retest 120 again, if not today then when the Naz dumps, which imo is likely to in Feb. What happens after a dump like this. Stocks usually retrace upwards but no more than 50% of the way up and then retest the lows made during the dump. See eg LU: Closed at 72 on 1/5, dumped to 52 on 1/6, back up to 58, back down to 50 back up but below 58. Q may be stronger because the news isn't negative like it was for LU -- the news just isn't positive for speculators. Q's September recover would support this cautious but positive forecast but I don't want to fool anyone. Better to assume the more negative LU-like scenerio for now. Eventually 150 will provide resistance that turns into support. When? Don't know. There is/will be buying going on here by the Big Boys (if 120 - the 50 moving average - does support Q) but it will be stealthy. Why? The long term prospect for this Q are excellent and China anticipation remains high for strong handed holders of Q. I will note however that managements statements regarding China (and GSM IP) yesterday were reiterations of previous statments made in Dec. Still nothing more than talk about "strategic alliances" for GSM and, relative to China, almost a verbatim reiteration of what had been said in December: "maybe something in a month but if not in a month then it may stretch out for a few months." I was disappointed in that but not overly concerned because it will happen and once it does FY2001-FY2002 estimates will move up according. Let's see if we hear anything at the March shareholder meeting and watch for price increase that can't be explained by news or options trading as a signal that China news is forthcoming. Hope that helps some. It's just my opinion. After Godzilla trashed Wall Street last night (in the move) I saw buying opportunity. I would caution indivdual investors will meager assets about doing that at this very moment - let the dust settle, first - give up a few points even. After it does it will be a trading range buy short term and a Strong Buy long term.