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

To: tradeyourstocks who wrote (101702)	7/16/2001 7:15:07 PM
From: cfoe	Read Replies (2) \| Respond to of 152472

Some further thoughts for us to chew on re: what NOK's future results may mean for QCOM. First, I agree with you and Ibexx in the short-term. However, here is why I think NOK is very important to QCOM and its stock price looking out 2 to 3 years. Right now QCOM's current year proforma eps is around $1 (I believe the range of estimates for the current fy is $.98 to $1.05). I will use $1 for the sake of simplicity. With QCOM currently selling at $60+, the multiple is 60+X. Now, I propose that one way to look at the prospects for QCOM's stock price over the next 2 to 3 years is to answer the following question: How soon will QCOM generate eps of $2+? (I am using the combined companies, as they exist now.) If it takes 3 years from the end of the current fy, this is a 30%/year CAGR. While this is not bad in light of many companies' prospects right now, it means QCOM's PEG is already 2. Now if QCOM could reach $2+ eps in two years, it would be clipping along at a 50% CAGR. This would make the stock look relatively cheap at current prices. So to me the key is how soon can the investing public (and institutions) see QCOM hitting $2+ eps? And I think NOK, the largest handset company in the world, can be an important factor in the answer being closer to two years versus three. If NOK is not to be part of the answer, we better hope QCOM comes up with other ways to get to $2+ eps by FY '03 rather than later. Comments?