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

To: SKIP PAUL who wrote (111870)	1/29/2002 11:51:18 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 152472

There is an inconsistency in your position. You think that we were in a bubble but you still expect bubble type of returns well, i think you might not understand my position because it is very consistent. i don't have bubble expectations at all, which is why i am short the QQQ. the point about expected returns is ultimately a thought experiment. Historical market returns are about 8%. no, the historical return on the SPX since 1926 is about 11%. I say 13% expectation is unreasonable i agree it is unreasonable. but while you may think 13% is unreasonable, probably many others are expecting much more. i gather that many thread participants have a significant percentage of their assets in QCOM. why would somebody take a risk like that if they only expected 8%? Also 10 years is too far to forsee of course it is. but i give QCOM the benefit of the doubt by assuming they will maintain an incredibly high CAGR of 25%, or 15%, or 12%, for an entire 10-yr period. i also run scenarios where i assume one (higher) rate for yrs 1-5, and then a lower rate for yrs 6-10 (when law of large numbers kicks in more). basically, if you want to do a discounted cash flow analysis, you need to consider something beyond year 5 for an equity. so it is posited that QCOM is a growth stock that will have stellar performance for 10 yrs. just relying on 5 stellar years would result in a lower calculated NPV. how do you value a new triple digit growth business such as wireless internet hopefully not the way they valued the dotcoms 2 yrs ago. as far as QCOM is concerned, these new markets seem to be needed in order to fuel the fantastic growth many are anticipating. so assuming a fantastic CAGR, as i have, should encompass new markets QCOM tackles. in fact, all the promising new markets you cite, w/r/t QCOM, will ultimately boil down to a consolidated CAGR hopefully greater than zero but (alas) less than infinity. plugging in different potential CAGRs yields different expected returns. QCOM's normalized base earnings in 2001 are about $1.13 if you adjust for the discontinued Globalstar operations. well, they are looking like 90 cents for 2002, but i generously assume a buck. (as an aside, when you adjust for G, do you also back out all the revenues/profits they booked for shipping handsets and such to G over the years?) again: Also, how do you value a new triple digit growth business such as wireless internet that will start in H2 2002? I expect local wireless ISP's to proliferate over leased and unlicensed spectrum all over the landscape through out the globe. This business is potentially significantly larger than the voice business. the way you put it, it sounds like you expect some really explosive growth from QCOM. so to me that sounds a little inconsistent with your more sober view of share price appreciation potential (calling 13% a bubble type of return).