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To: techguerrilla who wrote (15212)	4/19/2000 3:37:00 PM
From: LBstocks	Respond to of 35685

Alex Cena's report regarding QCOM's earnings> QCOM: In Line Quarter; Outlook Remains Bright Qualcomm Inc(QCOM)* Rating: 1H Salomon Smith Barney ~ April 19, 2000 04/19/00 QUALCOMM, Inc. (QCOM $116.87,1-H,Tgt $200.00) Alex M. Cena --SUMMARY:--QUALCOMM, Inc.--Telecommunications Equipment * Last night QCOM reported F2Q00 pro forma oper EPS (excl handset biz) of $0.26 which exceeded our consensus est of $0.24. * EPS exceed ests due to stronger margins in Wrls Sys despite lower than expected margins in ASICs * Single biggest item in qtr was book-to-bill on ASICs was close to 1.3 * Seasonal & inv issues that impacted ASIC results in Mar qtr have past. In fact QCOM expects June qtr ASIC shipments & revs to exceed Dec qtr levels * We est June ASIC shipments & revs to inc 10% & 5% respectively from Dec * Pro forma revs were $649 mn, in-line w/our $660 mn est & an inc 16% YOY * Roy fees from 3rd parties inc 95% YOY to $149 mn * Cont to recommend QCOM w/1H rating & believe it will be major beneficiary of 3G ntwks from both migration of existing CDMAOne ntwks to cdma2000 as well as W-CDMA ntwks which are about to be deployed in Europe & Japan 04/19/00 QUALCOMM, Inc. (QCOM $116.87,1-H,Tgt $200.00) Alex M. Cena --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/99 EPS $0.08A $0.10A $0.19A $0.23A $0.62A Previous 09/00 EPS $0.25A $0.24E $0.26E $0.30E $1.05E Current 09/00 EPS $0.25A $0.26A $0.26E $0.30E $1.05E Previous 09/01 EPS $N/A $N/A $N/A $N/A $1.40E Current 09/01 EPS $N/A $N/A $N/A $N/A $1.40E 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: 04/19/00 QUALCOMM, Inc. (QCOM $116.87,1-H,Tgt $200.00) Alex M. Cena --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (04/17/00)....:$116.87 P/E Ratio 09/00.....:111.3x Target Price..:$200.00 Prior:No Change P/E Ratio 09/01.....:83.5x Proj.5yr EPS Grth...:44.4% Return on Eqty 99...:48.9% Book Value/Shr(00)..:9.90 LT Debt-to-Capital(a)0% Dividend............:$N/A Revenue (00)........:4163.00mil Yield...............:N/A% Shares Outstanding..:790.8mil Convertible.........:No Mkt. Capitalization.:92420.8mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: 04/19/00 QUALCOMM, Inc. (QCOM $116.87,1-H,Tgt $200.00) --OPINION:------------------------------------------------------------------ THE QUARTER AT A GLANCE We point out that all numbers stated below are pro forma for the sale of the company's handset division to Kyocera, which was completed on February 22. EARNINGS PER SHARE: Last night, after the close, Qualcomm reported F2Q00 EPS of $0.26 (excluding non-recurring items and pro forma for the sale of handset division), which compares to pro forma EPS of $0.18 last year and our consensus estimate of $0.24. The better than expected earnings were driven by better than expected margins in the company's Wireless Systems business, which includes its OmniTRACS and GlobalStar operations. REVENUES: Qualcomm reported pro forma revenues, including licensing and development fees, of $649 million, an increase of 16% from $558 million in pro revenues reported last year and basically in-line with our estimate of $660 million. SEGMENT REVENUES: Revenues for QCT (ASICs) increased 6% YOY to $279 million from $263 million last year and our estimate of $310 million. As management had previously indicated, ASIC shipments and revenues were adversely impacted by seasonal and inventory issues from equipment manufacturers as well as carriers. QTL (License and Royalties) revenues increased 57% YOY in the quarter to $168 million., which compares with our estimate of $170 million. Of the licensing revenues $149 million were from third party licensees, an increase of 95% YOY. QWS (Wireless Systems) revenues increased 5% YOY during the quarter to $188 million and compared to our estimate of $194 million. PROFITABILITY: Gross margin for the quarter was 64.1% versus our estimate of 64.8%. Operating margin for F2Q00 was 41.3%, versus our estimate of 44.2%. The slightly lower than expected margins in the quarter were a result of the weaker than anticipated results from its ASICs business. However, the company has indicated that the seasonal and inventory issues that impacted operating results in its ASICs business have subsided and QUALCOMM expects June quarter ASIC shipments and revenues to exceed the December quarter levels. BALANCE SHEET: The balance sheet remains healthy and working capital requirements stable. The company now has over $1.7 billion in cash and equivalents on an asset base of $6.1 billion.