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

To: foundation who wrote (70424)	4/11/2000 9:08:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 152472

<Failure of China's MFN trade status is a substantial concern for me at this time, and could well test our support levels. Any negative news is pounced upon presently, and good news is rarely good enough... Watching closely.> Agree, but Q has many press releases about to happen, so the comfort level for me anyway has increased. we are getting to match-point rather quickly.

To: foundation who wrote (70424)	4/12/2000 7:44:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 152472

However, Tuesday morning during a conference call with investors, the company dropped what seemed to be a bombshell. It warned that for the full year it will earn $3.14 per share-$0.04 less than currently published estimates. Motorola Mauled: Buy on the Panic Analyst: David Peltier (4/12/00) What a difference a conference call makes, huh? After the close on Monday Motorola (NYSE: MOT - news)reported first quarter earnings of $0.59 per share, a penny ahead of the consensus estimate. This also was more than double what the company earned during the prior year's comparable period (including charges taken in 1999). Investors were generally happy with these results even though they came in lower than the so-called ``whisper' estimate. We were very pleased with the revenue figure, which was in line with our estimate of $8.8 billion. As we noted in our most recent note, the Street was assuming strong earnings growth but was keeping an extra close eye on the sales number. But, Motorola posted a 19% improvement from continuing operations over the prior year, its best performance in over six years. However, Tuesday morning during a conference call with investors, the company dropped what seemed to be a bombshell. It warned that for the full year it will earn $3.14 per share-$0.04 less than currently published estimates. Keep in mind that this is still 51% better than the $2.08 that the company posted last year. Investors, however, took this news poorly, knocking the stock down sharply. We believe that this selling is way overdone, as the company is still basically on target to accomplish its goals for 2000. Why? Let's start with the Personal Communications Segment (PCS). Sales grew by 24% to $3.2 billion. Yet, operating profits declined 41% to $49 million. The decrease in margins was expected as Motorola is shifting the focus of its cellular handset business to the lower-pricing tier. The company also ramped its advertising spending in its uphill battle against Nokia (NYSE: NOK - news)and Ericsson (NASDAQ: ERICY - news). And keep in mind that Motorola's first quarter net margin doubled over the prior year, to 5.1%. Phone sales improved sequentially over the historically strongest fourth quarter, a great sign that the company is gaining market share against its largest competitor, Nokia. Motorola did report that it still experienced mildly disruptive component shortages, but that these should disappear in the next quarter. Going forward, management warned that its 10%target for operating margins might be in trouble for the next two quarters as a result of increased spending. The company feels that this figure will return to normal by the fourth quarter, and long-term investors would benefit in the future from increased share gains now. Keep in mind that Motorola sees second quarter revenue coming in at $9.8 billion, up 25% from the prior year. And while $0.67 per share may be three pennies below the consensus estimate, it is still a 52% increase over the prior year. For the year it expects 24% sales growth, which is far ahead of previous estimates. While the company derives 36% of its sales from PCS, Motorola's other businesses continue to look strong. Each of its six units are still on track to post double-digit sales gains for the year and rack up margin improvements for the year. Network systems saw operating income grow 45% to $280 million, leveraged from an 11% sales improvement to $1.8 billion. Internet infrastructure continues to be a hot business, with worldwide demand at a peak from companies racing to build out their networks. Motorola's broadband business posted 15% sales growth to $678 million. Operating profits came in at $91 million, 49% better than the prior year. The company expects to ship over five million interactive set top boxes and three million cable modems this year. Management said that some of the extra leverage came from synergies realized from last year's General Instrument merger. The previously troubled semiconductor unit showed sequential profit growth for the fifth consecutive quarter. Operating profits came in at $123 million on $2 billion of sales. Over the last five years the company had experienced trouble with this segment, despite good returns in the overall industry. Many analysts are suggesting that the latest chip industry up cycle will last for 24 months, and Motorola is committed to continually ramp its capacity in 2000 through strategic ventures and acquisitions. The company sees 20-25% industry growth in 2001. Overall we are very pleased with this quarter, and see no reason to panic for the rest of 2000. Motorola met our Street-high revenue estimate and posted double-digit growth in each of its units. While the company seems to be doing well, we will continue to monitor the PCS business closely. We are confident with management's new guidance, which is actually above the company's previous goals. When the broader markets calm down we think that Motorola can re-test its recent highs in the $180s. The stock should also gain momentum around its 3-for-1 split, which will take place after the close of trading on June 1. Updated April 12, 2000 with MOT at $125.50