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

To: Jacob Snyder who wrote (91466)	5/7/2010 12:04:44 PM
From: matherandlowell	5 Recommendations Read Replies (1) \| Respond to of 196531

Jacob: You seem to have analyzed the trading pattern of QCOM quite well: clearly if investors had bought at around 36 and sold around 46, they would have made money over the course of the last 6 years. However, I am sure you would agree that there is no way to know prospectively what the trading pattern will be over the next 2 years. The psychology of investing in the Qual is at least as interesting as the technical details of the underlying technology. While we might try to understand the physics of spread spectrum, the ever shrinking nanometer chip design, the intricacies of patent exhaustion, or the seemingly obvious but ever confounding power of marketing, the questions of why people invest when they do and how they hold when times get ugly remain difficult to comprehend (at least for me). For instance, we all know that investors should buy when prices are low and sell when they are high but how many of us, faced with the panic of the last week, have placed buy orders? The truth is that when markets go into panic mode, emotions take over and people do things that we would all later characterize as irrational. Why do we all want to sell when we see our holdings diminish in price and want to buy when prices keep climbing? It is indisputable that these impulses come to us. We have all read about them many times. We all wish we had loaded up on the cheap and sold when dear. But emotion is hard to extract from investor psychology: good judgment is only evident in retrospect. I think that you are analyzing the stock well but no one knows the answer to when to invest because no one can know with certainty what will happen to either the stock or the stock market. You might try putting in an order lower than current prices but likely to be filled on a wave of panic. We seem to be in some pretty rough surf here and rising and falling prices are simply a characteristic of this uncertainty. If the rough surf doesn't make you rich it is almost certain to make you nauseated. jay

To: Jacob Snyder who wrote (91466)	5/20/2010 3:08:20 PM
From: Jacob Snyder	3 Recommendations Read Replies (2) \| Respond to of 196531

re: 5Y EPS growth: Using non-GAAP earnings, to compare 2005 with 2010, is not apples-to-apples, because QCOM changes the definition of "non-GAAP" all the time. The only possible apples-to-apples comparison uses GAAP. The company, and unfortunately the analyst herd as well, and business journalists, mostly use the bogus infinitely-flexible non-GAAP numbers. Just like the company trumpets the number of shares they are buying back, while burying the fact that share count isn't decreasing. When was the last time you saw a headline saying, "QCOM Share Count Barely Changed Last 5 Years"? It will be easy to grow non-GAAP EPS by 15%/Y, going forward. All that is required is: 1. continuing creativity in the definition of non-GAAP 2. continuing credulity by investors, analysts, and journalists Growing GAAP EPS at 15%/Y will be a lot harder. QCOM PE: 14 = (36-11)/1.77 = (stock price - net cash/share)/EPS GAAP 2010 A PE of 14 is not a screaming value, but it's fair for a company growing EPS at 8%/Y. I'm letting my irrational exuberance run wild, by using 2010 EPS. If I wanted to be conservative, I'd use trailing 12 months EPS. I hope I'm not offending all the careful value investors on this board.