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

To: Jim Mullens who wrote (49150)	12/9/2005 6:07:09 PM
From: kelseysuncle	Read Replies (1) \| Respond to of 196568

Don’t think so. This info was presented in Nov when guidance was first presented and again during London day. You're right, the info was presented at each, but in each case the effect of options expensing was coupled with quick almost disclaimers that it would be offset by the expiration of royalty discounts. Slide 5 had no such disclaimer and was the first I had seen in big bold letters that said GAAP EPS would be down YOY by 2-6%. That it was early in the presentation emphasized the effect to me. I've been trying to understand why there has been such stock price weakness given the news and the prospects you like to point out. The comparisons the “analyst” ( First Call, etc) make are to the “proforma” figures--- $1.17 vs $1.48 for ’06 and $1.75 for ’07. Again, the Q’s forward FY PE is only 26, significantly less than these other NAZ “High flyers” – EBAY- 43.9 Yahoo- 53.6 SBUX- 37.1 GOOG- 47.4 APPL- 32.3 AVG- 42.8 Fy06 EPS $45.40 / $1.48 = 30.7 PE - Curr FY Fy07 EPS $45.40 / $1.73 = 26.3 PE - Forward FY QCOM @42.8 x $1.73 = $74 potential vs $45 today An alternative calculation can be made: TXN-19.75 NOK-16.41 MOT-18.13 ERICY- 16.75 BRCM-28.03 AVG- 19.81 44.45/1.24 = 35.85 FY06 GAAP PE 44.45/1.49 = 29.83 FY07 GAAP PE The forward PE for QCOM is significantly higher than its wireless competitors and as you point out significantly less than NAZ "high flyers" If I continue your comparison with this average PE and Keitel's GAAP numbers I get: Qcom @ 19.81 x 1.49 = $29.50 potential vs. $44.45 today. Now given these relatively pessimistic numbers, have I run out and sold my holdings? Absolutely not! I am quite long QCOM and have added on dips this year. I think the company is one of the best long term investments there is. However, the stock is richly valued compared to its competitors and I had beleived it deserved to be. Slide 5 and the recent action has shaken my confidence so I will be watching quite closely to see which set of numbers Mr. Market settles in on. ku