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

To: straight life who wrote (250)	11/2/2003 11:45:48 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 2955

Correct me if I'm wrong, but hasn't Tim always been enthusiastic about qcom... and a little over the top at times? I can remember him projecting a 50% compound growth rate back in '99. uf

To: straight life who wrote (250)	11/5/2003 4:17:31 PM
From: Eric L	Respond to of 2955

Lehman Brothers Tim Luke on QCOM ... Frank, << Correct me if I'm wrong, but hasn't Tim always been enthusiastic about qcom ... >> Essentially, yes he has. If you go back to 1998 and 1999, Tim was one of the 4 (what I would consider to be) experienced and competent wireless analysts (along with Alex Cena, Sam May, and Mark Roberts) who were consistently extremely bullish on Qualcomm. Amongst those four he was perhaps the most conservative - but consistently bullish none the less. All had confidence in Qualcomm's IP position relative to WCDMA and all expected technology adoption by carriers to increase and each of them projected expected cdmaOne/CDMA2000 to represent at least 20% of worldwide subscribers by the end of 2003 rather than 13.5% to 14%. That was, IMO, a somewhat realistic expectation back then but the cookie just didn't crumble that way. << ... and a little over the top at times? I can remember him projecting a 50% compound growth rate back in '99. >> I'm not sure about over the top, at least comparatively, unless you want to compare him to Marc Cabi who somewhat represented the other band of the spectrum wireless analyst wise as it relates to Qualcomm sentiment. I do not specifically remember Tim Luke projecting a 50% CAGR (EPS) in 1999, but it is certainly possible. After all, Qualcomm had shed the infra and handset units and he had CDG's and Qualcomm's optimistic subscriber and handset forecasts to go on and there were some assumptions made about cdmaOne/cdma2000 technology adoption by carriers that unfortunately didn't bear fruit, but could have. All this against a backdrop of a seemingly robust economy worldwide, exceptional growth in wireless subscribers and subscriber equipment sales, and tremendous enthusiasm for a wireless future and digital convergence. At the end of 1999 and as late as August 2000 Qualcomm was forecasting CDMA subscriber growth of 50 million in 2CY2000 - and the bitter reality turned out to be 30.3 million. You might also recall that when FQ1 2000 completed and Qualcomm warned (even before the Korean subsidy ban hit) that shipments of chips and telephones could slow in the second fiscal quarter, that Qualcomm also topped expectations and posted net income of $192 million, or 25 cents a share, "excluding charges," (of course <g>) up 290 percent from $49 million, or 8 cents a share, in the same period the prior year. It was a great start, "excluding charges." Even Merlin was excited: "Gotta love the annual increase in pro forma earnings ..." As for picking price targets since 1999, Tim hasn't been too much better or worse than the rest of us: Qualcomm Tim Luke QCOM TTM Date Closing Price Price Target Nasqaq GAAP P/E · 04-Nov-03 $47.32 ---- 1,958 53.0x 13-Oct-03 $43.25 $49.00 22-Sep-03 $44.62 $48.00 23-May-03 $30.90 $40.00 24-Apr-03 $32.63 $43.00 23-Jan-03 $37.93 $46.00 31-Dec-02 $36.39 ---- 1,335 61.5x 06-Dec-02 $41.48 $45.00 08-Nov-02 $34.76 $42.00 25-Oct-02 $36.52 $38.00 13-Sep-02 $28.58 $35.00 05-Aug-02 $23.75 ---- 1,206 ?? 07-May-02 $24.80 $45.00 08-Mar-02 $43.80 $50.00 25-Jan-02 $46.05 $52.50 31-Dec-01 $50.50 ---- 1,950 NM 05-Nov-01 $53.08 $65.00 18-Jun-01 $50.04 $85.00 31-Dec-00 $82.19 ---- 2,470 591.3x 07-Jul-00 $56.63 $120.00 24-May-00 $76.75 $150.00 29-Mar-00 $157.50 $180.00 26-Jan-00 $124.63 $160.00 31-Dec-99 $176.13 ---- 4,069 348.1x 23-Dec-99 $116.62 $130.00 03-Nov-99 $65.12 $70.00 31-Dec-99 6.48 ---- 2,193 30.1x Tim Luke is, like a lot of other analysts, a little gun shy. As a consequence he's playing things somewhat conservatively. He has however left himself a lot of room for potential upside in the detail that backs up his rather conservative earnings forecast for next year. He is for instance only forecasting 112 million cdma2000 handset sell-through for next calendar year, and I think that's light by at least 10 million and maybe 12 million or more. Our colleague Slacker whose judgment on this I respect would no doubt call me very conservative in my forecast. Luke is particularly light in his forecast of 7 million units in India and as he notes: "We continue to believe estimates may prove conservative ... We also believe that ultimately our estimates for handset sales in regions such as India could be subject to upward revisions in 2003. Meanwhile, we consider that Verizon could be a key beneficiary of wireless local number portability switches after November 24th." [implying upside to his forecast of 46 CDMA million handsets in the US] Right now he's going with the flow rather than the Mo. Go Mo! Best, - Eric -