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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: StockHawk who wrote (26364)	6/15/2000 1:12:00 PM
From: tekboy	Read Replies (1) \| Respond to of 54805

I picked up some Oct 60 QCOM calls this morning. Ed Snyder (of Chase H&Q) has consistently been one of the most obtuse and bearish QCOM analysts around; he was the "anti" guy they featured on CNBC the other day in the QCOM-related debate: Message 13822146 He had a "hold" on QCOM throughout much of last year, has never bought the basic story we have, and IMO is totally unreliable. (Note how the other guy in the debate actually calls what Snyder has to say "factually untrue.") Some have speculated that he might be beholden to certain anti-CDMA interests, but my hunch is that he's just a moron. Anyway, if you're a QCOM holder you bought without his approval in the first place, so by themselves his comments now constitute no reason whatsoever to sell. This is not necessarily to say that everything is hunky-dory with the Q. I personally believe that it is, but that is just the opinion of a hopelessly optimistic non-techie who follows the news and the boards pretty closely. My advice would be to wait for the next earnings report, see what the numbers are and what the management has to say about things, and see what the best-informed people here have to say about all of that. Only then would I even consider selling. tekboy/Ares@stiffupperlipnow,Plutus.com PS Mark Roberts, the analyst who's preannouncement of a less-than-blowout quarter helped cause a temporary dip (from about post-split high 40s to high 30s, as I recall), is a straight shooter who was just relaying word from Q management. You can see his general take in the CNBC debate with Snyder above; here's what he had to say in response to today's dip: Message 13887563 In general, don't ever listen to Marc Cabi or Ed Snyder; trust Tim Luke, Alex Cena, and Roberts. The PW guy with the big price target, Walter Piecyk, is bullish but doesn't have the demonstrated track record or knowledge of those other three...

To: StockHawk who wrote (26364)	6/15/2000 2:39:00 PM
From: Eric L	Read Replies (1) \| Respond to of 54805

StockHawk, << Anyone stepping up? >> I was sure tempted this morning. Didn't pull the trigger. Breaking down your quote from page 183 of the manual << "it is important to note that even the most successful gorillas will eventually underperform investor expectations and take a hit in their stock prices. >> We have sure seen that. I think some investors may have set the wrong expectations. << As the stock market catches on to the gorilla advantage, investors continue to incorporate higher expectations into the stock price, until any error in execution causes a shortfall. >> So far I have not noticed any errors in execution. To the contrary, Qualcomm appears to be performing well. It appears that they have successfully transitioned their business model and the value chain continues to form. CDMA subscriber growth remains significant and is forecast to quadruple by 2005. I have no reason to doubt these forecasts yet. We had a bit of a scare with DDI, and I am candidly surprised that the decision by DDI was not viewed as a bigger victory than it was. DDI/IDO has no shortage of existing spectrum like DoCoMo, and subscriber growth in Japan should be significant. It could offset any Korean shortfall due to curtailment of handset subsidies. While this curtailment is not good news, it appears its impact may be exaggerated. It appears that SK Telecom is prepared to due a nationwide rollout of CDMA 1x MC in 2001. This will get very positive attention for 2 reasons. Handset replacement sales should be phenomenal, and the world will notice just who seamless and easy the migration path to higher data rates is with CDMA as opposed to competitive technologies. I am convinced that this is going to start getting some very positive press once the rollouts commence. Here in the US, despite the decline in subscriber growth, there is a tremendously large base of analog users to convert to digital and CDMA handset sales should continue to be significant. Next year we should see 1xMC kick in to add to that. In eight days, Brazil will make a spectrum decision. There is a good chance that it will be for 1900 MHz and this will be CDMA positive if it tumbles that way. What appeared at first to be negative China news, now appears to be potentially good news, although more delay. CDG is not counting China in its subscriber forecast, and neither am I. I think it is now abundantly clear that UTRA DS will be the predominant 3G air interface. What is not exactly clear is how QCOM gets paid on this. Good news is we will get paid. Can QCOM make DS chips competetively? I would assume so. Lots of the good news is 6 months or so out, and in the meantime it is important to execute from an earnings point of view for the next 2 quarters. Yesterday we got a warning by Qualcomm's CFO that a failure in faltering satellite telephone provider Globalstar would have a negative impact on 2001 earnings. Potentially it was said that this would would shave a dime off Qualcomm's predicted 2001 earnings of $1.42/share. Bearn Stearns lowered its 2001 earnings estimates; Lehman didn't. I think there is enough positive loaded into 2001, that there should not be overly large concern about this. "MicroE" (S&P 500 board) colorfully had this to say on the earnings subject last evening: Today was really amazing. Some shmuck from the BS brokerage firm cuts estimates and major investors sell their shares with no questions asked? Let's see, the shmuck cuts fy2000 to 1.04 from 1.08. Q has already earned 0.51. The June Quarter will be good, everyone knows this right? Management did all but tell us that they would beat the 0.27 for this quarter. The high estimate is 0.29 and until I hear new guidance from management that's what I'm counting as a safe estimate. That leaves Q needing 0.28 in the Sep quarter to make the original 1.08 estimate. Since there is at least a 2 month time difference between ASIC sales and handset sales, I will venture a guess that at least 1 month of the Sep quarter should have a positive net effect from the 2000 holiday shopping season. So, the real question that this shmuck should be raising is: Can Qualcomm's potential weakness in the Korean business be offset with higher sales to other markets for 2 months in the next quarter? Since most manufacturers are capacity constrained anyway, companies like Samsung should easily be able to retarget capacity to different markets. Of course the Korean market itself may prove to be much stronger than anticipated due to the rollout of 1X services later this year. I'll comment on the shmuck's fy2001 estimates some other time, but for now lets just say that Qualcomm will beat his $1.30 estimate by a "very very interesting number". << This is to be expected. These moments of shortfall, however, far from being times to sell gorilla stock, can be good times to buy more of it - if you believe the dynamics of the gorilla's advantage have not materially changed..." >> I see no negative change in the dynamics of this gorilla's advantage. I have never really given much thought to Globalstar relative to the advantage I see for them. I am a little aggravated at the press from a few analysts (same ones that have been wrong before and Tekboy has called that one correctly, for sure) but I have difficulty taking a long term negative view on Qualcomm. - Eric -