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

To: qinvestor who wrote (91045)	4/22/2010 7:45:01 PM
From: matherandlowell	16 Recommendations Read Replies (4) \| Respond to of 197155

"So what is QC worth... Well 3G is peaking... 3G is near the top of the S curve now and core margins are under pressure. From a fundamental standpoint, I'd say less than a 10-12 PE given the growth rates in the 3G markets are slowing and there are increasing margin pressures in QC's core businesses and few apparent avenues to grow the core business. $2+ earnings * 10 PE = $20-$25..." Your question is certainly a good one but I can't agree with your answer. If you think that 3G is peaking, you are in good company at the "whine festival" currently occupying much of the Board. 3G is not peaking. 3G is just starting a rapid growth phase, not on the top of the S. Fortunately, opinions like yours lead to widespread panic and price depression, allowing guys like me to buy shares on sale. If Buffet were a QCOM investor, he would certainly like buying last week's stock at an 8% discount. I couldn't resist adding to my position today. Listening to the conference call, it is possible to get caught up in the accounting mumbo jumbo and miss the big picture of QCOM. The entire call seemed to be occupied with different explanations of ASP times unit volume. Forget the details: just focus on the earnings guidance. Management raised earnings guidance. And the market went into the panic characteristic of frightened animals-- sending the stock price down. And it might continue to go down for another month or so. BFD. In a year, no one will be able to remember this CC. We will be focused on new numbers and the new numbers will be pushing the stock price closer to 60 than to 25. Companies with 20% growth rates rarely sell for 10x earnings. When they do, it is a good idea to load up. Load up and wait for the day when the whiners are screaming "what was I thinking about?" Margins going down? Is that supposed to be a big headline as a technology goes mass market? Margins should go down. Unit volumes should go up. It is inevitable. The error here is that 3G has peaked. 3G is just getting warmed up. Rather than whine about how many iphones are sold, we should be grateful that we make a piece of every single one of them. And when the Droids start to take market share? Smile. You get a piece of that action too. That's the beauty of the QCOM business model. No matter who has the device of the hour, QCOM shareholders benefit. This is the greatest business model of all time. So when a management as conservative as Qualcomm's announces that it predicts record EPS, rather than lose control of your bowel function, perhaps you should take a deep breath and see that brighter days are ahead. Whine at your own risk but don't short this stock. j.

To: qinvestor who wrote (91045)	4/23/2010 4:29:57 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 197155

To the thread: it would be interesting to have a discussion, about what QCOM's Fair Value is today. I'm asking everyone to post their guess, with an explanation of how they arrived at that number. So far: 29-38 Jacob Snyder 20-35 ginvestor My reasoning: Fair Value = 29 to 38 = (1.77 X (10-to-15)) + 11 = this year's GAAP EPS, times expected LT growth rate, plus net cash I use GAAP because Pro Forma systematically excludes real costs the company has. The "one-time events" aren't. I am optimistically assuming that net cash of $11/share won't be wasted. I know, their track record would lead to a less optimistic conclusion. The PE should be about what the LT growth rate is. When I say "LT growth rate", I mean in GAAP EPS. The word "growth" is used a lot, and used loosely. Growth in what? Growing revenues by 20%/Y won't grow the stock at that rate, unless earnings (real earnings, accounting for all the real ways management wastes money) go up by the same amount. disclosure: currently on the sidelines, looking for an entry point. Trying not to catch a falling knife.