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

To: Wyätt Gwyön who wrote (49213)	11/28/2001 6:11:15 PM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 54805

My response to you being nuts was in regard to your cagr of 10%. Wireless is much much cheaper to deploy than wireline and is in its infancy as far penetration goes in third world countries. GNP is well known for tracking teledensity. Phones are the first thing that will come to these countries. Latin and South America- Current Population 444M wirelss penetration 14% India - Population 1B wireless penetration .3% China - Pop 1.3B wireless penetration 7.5% Southeast Asia - Pop 355M don't have penetration #s There is a lot of room for cagr > 10% As for a ten bagger on QCOM in 9 years, i think more like a 5 bagger. Caxton

To: Wyätt Gwyön who wrote (49213)	11/28/2001 6:28:39 PM
From: slacker711	Read Replies (2) \| Respond to of 54805

but it is no substitute for analysis. Absolutely.... Speaking for myself, I am unable to project what Qualcomm will earn in ten years. Of course, that is why I try and invest in companies with sustainable advantages. The ability of MSFT, IBM, and CSCO to leverage their core expertise into new fields gives me some optimism for Qualcomm over a ten year time frame. The kicker is that Qualcomm operates in a field which moves more slowly than previous gorillas so I can say with some certainty that CDMA will be the predominant technology used for wireless access in the year 2011. All of the above being said, I wouldnt invest in Qualcomm unless I thought I had some visability on their earnings growth over the near term. Let's take a look at the calendar year '03.... Royalties W-CDMA Nokia stated yesterday that they believe that 10% of handsets sold in '03 will be 3G. They may be including EDGE so let's go back to their previous estimate of 6%. An ASP of $500 (the same price as the 7650 which will be released during the 2Q '02) on a market of 500 million handsets with a royalty rate of 5% gives W-CDMA royalties of $750 million. IS-95 Hmmm....let's take an estimate of 120 million handsets with an ASP of $160. This would result in $960 million in IS-95 royalties. Chipsets.... Just to be conservative...assume a 0% markeshare on W-CDMA chipsets. Let's say a 75% marketshare in '03 on IS-95 chipsets. This would result in 90 million units. An ASP of $23 and a net margin of 25% would result in earnings of $517.5 million. Grand total of $2.225 Billion in earnings in '03. This would be about $2.75 in pre-tax earnings. A forward PE of 40x would mean that we should be at around 110 next year at this time. Of course, I am ignoring taxes.....but I am also ignoring royalties from infrastructure as well as earnings from on cash, BREW and Omnitracs. Could you go over your justification for a stock price of $10 for me one more time? Slacker