Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Ibexx who wrote (84321)	10/20/2000 11:43:18 PM
From: Ibexx	Read Replies (1) \| Respond to of 152472

PART V: Prudential Volpe on Qualcomm The new QUALCOMM valuation We searched for some good comparables against which to value the two new companies. For the new Spinco, the spin-off of the ASIC business, we looked at other wireless integrated circuit companies. We believe Spnco should trade at the same valuation as an RF Micro Devices based on its market leading technology and exposure to high growth CDMA. Based on RFMD's P/E of 49 times calender 2001 earnings, SPinco would have a current share price of $25. We believe the best comps for the remaining QUALCOMM are intellectual property (IP) companies that license their developed technologies to integrated circuit or systems companies. The range of multiples is pretty extreme for this group. Arm Holdings at the high end develops IP for wireless equipment companies, which is very similar to the Spinco model; however, ARM's valuation appears to be a bit of an outlier. Rambus' valuation is more reasonable, in our view, and we believe that QUALCOMM should trade at a premium based on its exposure to high growth markets, but we are slightly discounting to 100 times 2001 earnings to be more prudent. Based on 100x our 2001 EPS estimate of $0.80, we believe this part of the business should be worth $80 per share. Thus a sum of the parts valuation yields a current share price of $105 based on our conservative estimates. (Table omitted due to size and complexity) ........ Ibexx