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

To: Uncle Frank who wrote (103572)	9/2/2001 4:59:39 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 152472

Hi UF I was describing 4 year earnings growth of about 5x with my chain-saw precision. You suggest my estimate suffers a lack of relevance to the current Q's actual performance because of discontinued operations. Perhaps. Let's do the detailed math and see what we get. Forget pro forma, I'll even go better than that, using Q's own SEC sanctioned inter-segment information. Seems like they anticipated folks would like to know the details "sans discontinuation" too. Good for us because we can be accurate to six significant figures if you'd like. Hmmm... according to 2000 10-K Note 16 to consolidated financial statements, 1998 EBT of QTL (best performing segment and the one responsible for all that valuable IP) was 256,401 M$. 2000 EBT of QTL was 633,336. That's growth of 2.470010 in 3 years. But we were talking 4 years. From the latest 10-Q, QTL's 9 month EBT for 2001 is running 1.21211 x 2000 9 month EBT which gives estimated 2001 EBT of 767,675 M$. That's a 4 year growth of 2.99405 times. Give or take some rounding in the last few digits. Which is slightly less than the 5x I estimated. The business can't grow EBT faster than the fastest growing segment (the three reported continuing segments add up to 2.396538) So without dredging up 4 years of pro-forma press releases (let this muck lie where it belongs) I can pretty well safely say that Q's earnings have grown by less than 5x. With a degree of precision that errs in Q's favor. The extra precision hardly benefits anyone because I was comparing 5x with 100x, so perhaps I'm off by 2 (ish) in a direction that merely strengthens the point I was making. One is very very very much bigger than the other, and the precise degree of "by how much" doesn't seem to matter. John.

To: Uncle Frank who wrote (103572)	9/2/2001 5:56:35 PM
From: Maurice Winn	Respond to of 152472

UF, my point with the growth rate was to show the popularity of CDMA to the people who matter, who are those who actually get a job, save their money [or borrow a bit more on their credit card planning to repay it later from future earnings, which is okay by me though a lot of people seem to think there is an economic danger in that approach - it's actually an economic strength, an economic driving force, that is, "I owe, I owe, it's off to work I go", sung to the tune of the 7 dwarves in Snow White] and use their money or their creditworthiness, to buy a new CDMA phone. John stretched the point, to a meaningless issue, as you pointed out with the pro forma point about infrastructure and handset divisions being sold. But even more than that, the profit growth was compromised because most of the money goes back into development of more ideas. It's true that research and development is an expense, but it's not like cleaning expenses or air fares, accommodation etc which produce no income at a later date. Research and development expenses [a lot of them anyway] provide the earnings foundation in future. Especially when the research and development is not tweaking an old, nearly obsolete product, to squeeze out a few drams more value. QUALCOMM's developments are along the lines of BREW, Globalstar handsets [I hope], solid state nano computing, orthogonal frequency division multiplexing, software defined radio, position location, voice representation in bits, not to mention all those joint ventures and investments [such as Graviton, inViso, AirFiber, PayPal, PacketVideo]. QUALCOMM has a very extensive range of technologies building up. These mutually enabling technologies will become highly desirable as the telecosm develops. At some stage, their technological development and price elasticity curves will bring them into the middle of the human bell curve. That's when things will really become exciting. Not that it's been slow around here over the past 10 years. So, sticking with my central point, there is a huge growth rate in CDMA adoption with 5 billion people waiting, hoping to be in the price elasticity curve sooner rather than later. It's a huge market [in terms of dollars of disposable income after eating, as well as sheer numbers of people]. This is not a pet rock market, which is limited to a few wackoes. This is human communication. That's everyone with ears or eyes, which is a LOT of people. When people say, "Yes, but most of them are starving to death", that's not actually true any more and the premise of that claim should be tested against reality. Not only that, the trends which have already been happening for a decade or two, such as China's development and India's moves away from deep socialism [haltingly though they may be], mean that those 5 billion people are increasingly distant from famine and increasingly linked into the global economy and improved cash flow. Count television aerials in the poorest cities for example. A television set is more expensive than a phone [in inherent cost - meaning it weighs a lot], though the running costs are less [for now]. Mqurice