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

To: Jon Koplik who wrote (120170)	6/11/2002 12:58:16 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 152472

that consistently have a 90% or higher "drop right to the bottom line"... profit margin. no, it's not "drop to the bottom line". it's 90% GROSS MARGIN. you do know the difference between GROSS and NET margins, don't you? you need to deduct SG&A as well as taxes (among other various and sundry, depending on the co) in order to get net margins. also, the 90% gross margin component is LESS THAN HALF of total sales. at the end of the day, QCOM has a ttm operating margin of under 19%, and a ttm profit margin (net) of -2.1%. biz.yahoo.com dumb or being intellectually dishonest. these kind of reactions are very predictable. i will scream if i hear somebody bring up the grocery store analogy again. everybody knows QCOM has higher margins than many other businesses, but that doesn't mean PSR doesn't matter. it only means PSR should be compared to that of other (similar margin) businesses, both contemporaneously and historically. try to read the earlier posts in the debate before making these comments. at the end of the day, and especially absent a spinoff of the chipset business, QCOM is imho unlikely to have a sustainable aggregate margin profile which is better than MSFT's. yet QCOM currently trades at a similar PSR to MSFT (i.e., one of the very highest PSRs in the SPX). this is because, presumably, people expect QCOM's margins to improve (as indicated by the pro forma, thanks David), AND people expect LOTS more growth out of QCOM. in other words, a lot of good news is baked into the cake.