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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: brational who wrote (43090)	11/5/2004 8:35:14 AM
From: Jim Mullens	Respond to of 196551

Thanks BR for again sharing your awesome analysis with us SI folks

To: brational who wrote (43090)	11/5/2004 12:08:34 PM
From: carranza2	Read Replies (1) \| Respond to of 196551

Great post, especially this part: What they told us last year. To get the full measure of how strongly this company has performed, compare these numbers against the guidance the company management provide at the same time last year (at the time of the Q4 03 earnings release): Based on the current business outlook, we anticipate that revenues excluding the QSI segment will grow by approximately 5-9 percent year-over-year and earnings per share excluding the QSI segment to be in the range of $1.37-$1.43 for fiscal 2004, compared to $1.42 last fiscal year. Instead of 5-9 percent, they delivered growth of 33.4%, and the EPS came in at $2.18 per share (adjusting for the intervening stock split) instead of $1.37-1.43. They also said, then: We estimate the CDMA phone market to be 131-136 million units in calendar 2004, and we estimate a decrease of approximately 8 percent in average selling prices of CDMA phones for fiscal 2004, upon which royalties are calculated, compared to an estimated decrease in fiscal 2003 of 2 percent. Of course, the CY 2004 best estimate for CDMA handsets is at now 170M, while the ASP has increased, and is again projected to increase as more WCDMA and high end models form a greater part of the mix. I don't really understand it--the company has utterly and totally failed to deliver a couple of chips precisely, exactly on schedule. Isn't that enough, along with the obvious lies and misunderrepresentations concerning this year's income [the lyin' SOBs misunderestimated in a huge way, and a lie is a lie, regardless of how pleasant a surprise it represents; how can that be good?], to really make you wonder about the direction of this woefully lacking-in-credibility shop? Will you ever believe guidance again from that clownish IMJ? Not me. I would have been far happier if they had delivered a couple of chips timely than if the results had not been such a pack of [positive] lies. C2@mystorystickingtoit_vbg.com

To: brational who wrote (43090)	11/6/2004 8:46:00 PM
From: q1000	Respond to of 196551

Why Only 90% margins when royalty sharing ends? Your analysis of the Qualcomm numbers is terrific as usual. Thanks! But you suggested that the margins on the end of the royalty sharing agreements (which you said were believed to be with Lucent and Nortel) would be the "magical 90%." When I heard Bill Keitel on the conference call, I immediately was thinking 100% margins since all the costs associated with earning these royalties would have already been charged against the existing royalty base. My view was reenforced when I heard one of the answers in the Q&A when Qualcomm said that this was an "increase in the net royalty rate that Qualcomm keeps." If the existing royalty rate were 5% and the base were $1000x, the royalties would be $50x. If expenses were $5, the gross margin would be $45x--90% of the royalties. If the royalty rate merely increased on a pre-set basis to 5.5%, the royalties would be $55x and the expenses would not change. The gross margin would be $50x. To my knowledge, this royalty arrangement was not previously known and quantified. One would have thought that the disclosure would have added substantially to the market cap--many multiples of the net royalty increase. But no--Wall Street focuses on transitory issues! Thanks again for a great post.

To: brational who wrote (43090)	11/7/2004 3:46:19 PM
From: Art Bechhoefer	Respond to of 196551

BR--Picking up on your mention of $7.6 billion in cash and marketable securities, I would note further that it works out to almost $5 cash per share, or about 12 percent of the share price. That is indeed a very large proportion of the share price and argues strongly for (1) low downside risk, (2) an increase in the dividend, or (3) the ability to buy back shares that are relatively cheap, even in a market where tech stocks have not been doing very well (Google being the exception). In trying to maintain a balanced portfolio, I tend to limit too much exposure to any single stock. But with QUALCOMM at the present price levels, I think one is justified holding far more than would ordinarily be considered prudent. It's other stocks that should be considered having greater downside risk in this market than QCOM. Art