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

To: 100cfm who wrote (145232)	10/1/2006 12:20:39 PM
From: jimtracker1	Respond to of 152472

Limtex, each of us reacts to market factors in a different way. I react differently now that I am 71 versus when I was in my 30's, 40, 50. Admittedly age enhances patience. I buy tech stocks with a 10 year window of exposure. Needless to say, one reason I don't worry the day to day movement as my cost on QCOM is $1.50 and selling would create a tax problem which frankly effects my stock trading more than anything. I just don't want to pay "abnormal" income taxes. I have learned not to get an information overload. In addition with all of the years I have learned not to dwell on information as I know some of it is just not true. My decision to buy QCOM was based on original analysis and that has not changed. I know having too much money in the market, is a crazy maker. I have been there and done that. As far as depression, I know something about it. If you let it get out of control, it effects you and your loved ones. Needless to say, I don't agree with your analysis of the Q. I am looking forward to next year as I have several "cookers" that will bring in significant profits, and QCOM is one of them. I think my reason for chasing the financial rainbow is different than most. I am don't need the money, just the excitement of making it. The money is for my children and grandchildren and hopefully it will just make life easier for coming generations. It is not hard to make a million dollars, but it is hard to get the $150,000 to $200,000 to make the million. Jim

To: 100cfm who wrote (145232)	10/1/2006 1:41:30 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 152472

<I'm just wondering when we reach the point where more of revenue turns into net income rather than less. In other words when does the expense side plateau while the revenue keeps soaring thus dropping an increasing amount to the bottom line.> There does seem to be insatiable voracious expense growth. There is obviously a need for lots of R&D as technology keeps on charging ahead, but I get the impression that the costs are not as tightly controlled as they were. In the 1990s, $10 million was real money. Now, $1 billion seems to go down the gurgler as easily as $10 million used to. Maybe everyone thinks they are entitled to $millions. Doubling sales shouldn't result in a doubling of expenses. Sales are royalties, software and cloned ASICs. That doesn't cost any more money [much] to double sales. There should be a bottom line gusher going on right now. Well, there is, but it doesn't seem as spectacular as it could be. Maybe the $1 bn in R&D is going to do something really good soon. So far, R&D has kept QCOM ahead of Nokia and co, which is obviously a substantial challenge. But the R&D now seems to be incrementally beneficial rather than step function improvement as it used to be. A bit like oil industry R&D seemed to be more like housework than inventing the wheel, or sliced bread. I liked it better when QCOM R&D breached the laws of physics. When are they going to change financial relativity theory, [invent the Qi cybercurrency], patent reverse spin gravitons, and make photonic free space computing using hologram processing = all light, no silicon? My prototypes are doing okay but I lack a little something. Mqurice

To: 100cfm who wrote (145232)	10/1/2006 1:44:32 PM
From: Jim Mullens	Read Replies (2) \| Respond to of 152472

100cfm, re: QCOM disappointments and “Yes your numbers prove my point. Look at the difference between unit growth and earnings growth. Especially 06-07.” There was a time when it was a given that Q's earnings would outperform it's revenue growth rate by a wide margin. Not now. But if we want to get back to PEs of between 30&40 which is where Q should trade at, we need earnings growth to be much closer to the unit growth rate. Afterall what's the good of selling more and more widgets if more and more isn't falling to the bottom line.?” Fair question. 1. There is no doubt that the Q’s outstanding financial performance over the past two years benefited directly from WCDMA sales and their higher ASPs which have been averaging close to $215/ handset. However, in order to benefit long term from 3GSM’s (WCDMA) ascendancy as those 2 billion subs convert to 3GSM (WCDMA) one must be realistic and recognize that WCDMA ASPs must drastically decrease. FWIW, my financial model reflects CDMA/WCDMA handset ASPs falling to $168 in 2009 while at the same time just handset related EPS growing annually between 25 -30% over that same time span. 2. And Yes, the Q’s expenses have significantly grown over the past several years to mainly fund robust R&D initiatives for both MSMs and new technologies, and to fund SG&A as 3GSM carriers deploy their new WCDMA/ HSDPA networks. What’s even more amazing is that as R&D expenses have compounded at about 30% for the past five years. EPS has still been able to compound at over 26% for the same period. 3. Re: ”... if we want to get back to PEs of between 30&40 which is where Q should trade at, we need earnings growth to be much closer to the unit growth rate.” IMO, the Q has done a darn good job in doing both--- strategically planning for long term future growth and dominance in the wireless industry and robustly growing revenues / EPS. Further, QCOM’s PE should be in the 30-40’s based upon it’s past / future growth potential and not currently realizing such is because of 1) general market multiple compression, and 2) the FearUncertainityDoubt (perception) that the Q’s business model will fail. 4. Some interesting info I just pulled together from the Q’s MSM Roadmap / Dr. Jha’s and others recent presentations. Perhaps most interesting is that MSMs in development tripled (3 fold increase in Cy05 /06 from earlier levels. + 29 MSMs in production / development ....12 now in production as of May 06 .... 2 more in production (QSC6010, 6800) with commercial devices to be available before 06YE . + MSM products in development by sampling dates ....2002- 5 ....2003- 3 ....2004- 3 ....2005- 9 ....2006- 8 ....2007- 1 .......note- 11 of the 17 in ’05- ’06 are non-Value platform MSMs . + MSMs by platform ....Value-.............9 ....Multimedia.....11 ....Enhanced........5 ....Convergence...3 . + MSMs by technology ....CDMA .......12- 1x .........3- EV-DO .........2- EV-DORA .........1- UMTS/EDGE/HSDPA/DORA .......18- Total ....3GSM/ WCDMA/UMTS ........1- GSM/GPRS ........3- EDGE ........3- EDGE/ HSDPA ........1- HSUPA ......11- Total Bottom line, the Q is unique in that it continues to work at strengthening its long term future / dominant position in wireless while at the same time – + Paying dividends- raising such 5 times in the past three years + Repurchasing shares when appropriate + Strong Balance Sheet ($10+ B cash / Growing Cash Flow (+ $3B /year) + Growing revenue and EPS- +25 % five year CAGR + Providing for the future- R&D + 30% five year CAGR On the other hand, the Q’s competition appears to be going in the opposite direction, withdrawing from the CDMA2000 market place, reducing R&D expenditures, and using its resources to primarily buy back shares to enhance its EPS growth. IMO the Q despite its phenomenal past success continues to be a unique long term investment opportunity although the market place currently fails to recognize such. Handset Sales- units in millions ............................CY05.....CY06....CY07 ... %04-06..%05-06 CDMA..................166........189........212 WCDMA.................59........110........223 Total.....................225.........299.......434........+92%......+45% . EPS ..Your# (high?).....$1.17....$1.65....$2.00..... +71%.......+21% ..Avg...................................1.63... $1.82......+56%.......+12% ..Year ago est....................$1.44...$1.59 ....”analyst” miss-Avg ...........13%......14% ....”analyst” miss-High...........15%......26% Revenue- $ in billions ...Avg...................$5.67.....$7.49....$08.63....+52%...... +15%. ...Low..................................7.44.......07.76 ...High.................................7.63.......10.00....+76%.......+31%

To: 100cfm who wrote (145232)	10/1/2006 1:49:23 PM
From: limtex	Respond to of 152472

100 - My point precisely put. Jim postualtes a 20% increase in 06 for 07. Note thats not fiscal 07. Two things:- 1.The numbers don't make sense to me. They are in a sense upside down. The increase in units is over 30%. A large slice of these should giver rise to royalties. Roylaties shouldn't have a great costs of sales and therefore a majority of royalty income should drop straight into eps (minus taxes). Even the chipsales should be at the stage of being marginal income and fall also straight into earnings. The point being that there should be leverage in the increased unit sales that translates into increased income the gross profit on which should drop straight into eps. Even allowing for reduced ASPs this should still provide a heafty increase in eps. 2. Jims figure of 20% increase in eps could easily with some ASP reductions and increased costs result in a lower than 20% increase, maybe even an increase in eps in single figures. What P/E does that command? Something its seems to me is very wrong with these numbers. Best, L