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

To: Lorare who wrote (6426)	12/14/1997 1:14:00 PM
From: kech	Read Replies (1) \| Respond to of 152472

Lorare - Thanks for this news! It sounds like Mr. Market has been a little manic here on the downside.

To: Lorare who wrote (6426)	12/14/1997 1:20:00 PM
From: dougjn	Read Replies (3) \| Respond to of 152472

Can you explain in some amt of detail: <<Harvey White spoke at a Bear Sterns internal presentation in San Francisco on Thursday and made the observation that Korea should not have a substantial impact on Qualcomm's bottom line.>> Looking at the just filed 10K, Qcom's 97 Royalties were 152m, out of total revenues of 2,096m. However, Royalties, essentially all of wich fall straight to bottom line, accounted for more than 100% of Total Operating Income, of 97.5m (Interest and net securities /subsidiary gains took pretax net to 108.5m). (Now of course it may be fair to ascribe a part of G&A to royalty income, but the point I think is that very little expenses will be saved if royalty income declines.) Crudely speaking, a 20% decline in royalties, eg., in 97 would have resulted in a 20% decline in net income. Actually, worse, a 1.5 multiplier, or a 30% decline. Now in 98, I believe the $2.20 projections included some significant expected PROFITS (for the first time) from handset sales. Mostly in the US. Asic sales have in the past also be relatively profitable, I believe, for qcom. (They had been loosing money pretty handily so far on the handset ramp, I think, which is not surprising. Probably changing now.) Korea provides royalities and Asic sales. What percentage, I don't know, but I'll bet something like half. I does appear to have 75% of handset installed base, or perhaps did a year ago. If Qcom looses half of half, due to lower sales, lower wan translation...that's 25% off their bottom line. Unless other areas were gonna increase significantly faster in the projections. Which they probably were, but still. We have a 2.20 down to 2.00 estimate so far from Schroeder. My guess is it could be another 20-40c beyond that. Just guessing. 51/1.80 = 28. In this market, with Asian, third world uncertainty generally, that may be about right. But if it is more than a total .40 off estimates, there may be lower to go. Thoughts?? Doug