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

To: Stock Farmer who wrote (126205)	12/30/2002 4:40:01 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 152472

Hi John. Well, you won't get much argument from me on any of that as a line of reasoning. Nor are we even all that far apart on the quantification of the opportunity [I'm under the impression that you think QUALCOMM has a value something like $10, whereas I'm not buying more at the current prices, although I have cash burning a hole in my pocket]. So if we believe what I do rather than what I say, I think QUALCOMM is worth around $30 a share given what I currently understand about how things are set up to proceed for the next decade or two. Neither did I swap my cash for QCOM at $23 a share, which means I suspected that that was not the lowest we might see. For me to go whole hog I will want to see distress sales with high returns on investment, even if some missteps from the pure path were to later happen along [which they seem to do all too often]. I have been genuinely surprised at how slowly CDMA has been adopted and how resilient GSM technological improvements have been in holding off CDMA and how slow 3G cyberspace has been in coming. Also, I was amazed that marketing of Globalstar was as appalling as it was - I really did think they'd fail initially, but then realize that things were going badly and do the only thing possible, which was cut minute prices. So, my valuation of QUALCOMM has been shredded over the past couple of years, pretty much in line with the market. I had thought it was excessively priced at $160 a share, and expected to go through a trough, but not such a large one or I'd have sold and bought back again and paid the capital gains taxes [which I don't have to pay in NZ, provided I avoid any trading of shares - it's a buy and hold requirement]. $29 billion for QUALCOMM right now seems to me to be reasonable. That's $10 per person for the rich half of the world, 3 billion people, of whom 1 billion already have a phone [despite their high purchase price and high price per minute]. So, when competition drives minute prices down to where they should be and handset prices drop too [or, more likely, functionality increases as happened with computers for a couple of decades], it doesn't stretch my imagination at all to think that 3 billion people will have cyberphones by 2010. More importantly, they will be replacing them every couple of years on average. Also, they will have more than one or two devices per person. So, the market size seems large enough. 3 billion people each giving QUALCOMM $20 by 2010 is a reasonable place to start. That's $60 billion, which, given current alternative investments, isn't all that bad [beats the 1.1% I'm getting for my US$ right now though not fantastically better than the 5% I could get if I had NZ$]. Yes, I realize that QUALCOMM isn't the only company which can sell ASICs and many of those 3 billion will just want a really cheap phone, so maybe 1 billion of them won't buy a $20 ASIC and will get a really cheap one from somebody else. Anyway, I'm not going to add up all the bits and pieces right now. Suffice to say that we are in the ballpark. No, I don't think I'm going to see another 10x capital gain in the next 10 years. That's my approximate valuation right now. Happy New Year, and may all your photons be phragmented. Mqurice

To: Stock Farmer who wrote (126205)	1/2/2003 5:38:08 AM
From: elmatador	Read Replies (1) \| Respond to of 152472

How about the technical obsolescence matter? QUOTE One of the guiding principles of MACRS ("Modified Accelerated Cost Recovery System") is that the depreciation tax life of an asset should be shorter than the actual book life of the asset (i.e., "accelerated"). The median five-year recovery period used by companies filing their tax returns is more consistent with the principles underlying MACRS as to the rapid obsolescence of cellular equipment. The IRS has typically proposed to use a 10-year recovery period, which equates to a 16 to 20 year class life, for cell site equipment that appears to be clearly contrary to legislative intent. Given the rapid technological advances in the cellular industry, the appropriate class life of these assets will not even approach 10 years, let alone 16 years. UNQUOTE QUOTE Western Europe Regional: No 3G Boom Until 2008, Says EU Telecoms Commissioner World Markets Telecoms (Mon 16 Dec 2002) Erkki Liikanen, the EU telecoms commissioner, has said that he does not expect a boom in 3G (third generation) mobile telephony to occur before 2008. Speaking in Germany's Focus magazine, Liikanen said that slow investment in the telecommunications sector meant that 'we will have to wait at least five more years for a real boom in UMTS'. Liikanen added that he expects camera phones to become very popular. UNQUOTE I am here thinking if the Europeans are waiting for the full depreciation of their 2G networks before engaging in building 3G. 5 years in a rapid technology as wirelss seems to be an eternity!!! That surely provide entrants with alternative technologies (WI-FI for instance) to make available a few bits of the whole promised digital wireless Nirvana that will come in 5 years time.