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

To: Boplicity who wrote (99337)	5/17/2001 1:20:35 PM
From: Uncle Frank	Read Replies (3) \| Respond to of 152472

67 to 68 was just a hiccup. Where do you see the next resistance from a ta stand point? uf btw, sebl might just take a stab at breaking through 50.

To: Boplicity who wrote (99337)	5/17/2001 1:56:01 PM
From: Jacob Snyder	Read Replies (6) \| Respond to of 152472

Finished selling my QCOM today. I bought QCOM last year (av. cost 67), and have sold in the last month (av. price 64). Reasons: 1. TA: from July 2000 till mid-February 2001, the chart had a very reassuring pattern of higher highs and higher lows. That was broken in February. Since then, the stock has stalled repeatedly in the mid-60s, and set several new lows. 2. valuation: QCOM will make about 1.05 in FY01. PE=65/1.05= 62 In the current environment, I don't think any company is going to be able to sustain a PE that high, and certainly no company in this sector. Earnings growth in the next 12 months do not justify a PE of 62. An investor holding or buying QCOM in the 60s is paying for expected earnings further into the future. 3. market risk: the Fed has about reached the end of their ability to lower interest rates and pump in liquidity, without setting off inflation. There are numerous warning signs that inflation is heading over 4% by year-end, consumer spending is at unsustainable levels, debt levels (corporate and consumer) are at unsustainable levels, and corporate profits continue down. The Fed is putting a floor under stock prices at the moment, with this series of 1/2% rate cuts. I expect them to be raising rates by year-end. 4. sector risk: U.S. and European telco service companies have added about 750B in debt in the 1990s. The telecom buildout (on which QCOM's future profits depend) was financed with debt, not out of the cash flows of telcos. This is coming to an end. I'd guess that, over the next several years, 100B to 200B of that debt is going to be written off. During that period, spending by telcos will have to come out of cash flow, as financing options will evaporate. This has already happened with the weaker players, and it will spread to everyone in the sector. When credit is shut off to a sector, nothing gets funded, even good ideas. 5. China: the latest spike in QCOM into the mid-60s is about the 32d rally this stock has had based on China news. Doesn't anyone remember what happened with the last 31 "China news" rallies? How many times do investors need to be fooled? There is a longterm consistent pattern in any multinational doing business in China: the results always end up being a lot less than the initial prospects. China does business with U.S. tech companies, in order to get their technology. The plan is always to learn how to do it themselves, and then end the relationship. They are very casual about patents and copyrights. Chinese decisionmakers will not tolerate any longterm dependency on U.S. technology, especially something as critical to security as CDMA is.