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

To: Skeeter Bug who wrote (8149)	2/7/1998 8:52:00 PM
From: arun gera	Read Replies (1) \| Respond to of 152472

Skeeter: Speculation or no speculation, try to find companies equivalent to Qualcomm's existing operations and put their individual market caps against Qualcomm's businesses. I think Qualcomm's handset business is certainly stronger than Audiovox, which trades at 0.2 times sales. I assumed 0.3 sales for Qualcomm, not something like one time sales. That is what I mean by no speculation. Just inherent value of building a large business and to recreate its operations and existing clients. Highway Master currently has a market cap around $200M with sales one fourth of Qualcomm's Omnitracs business. I am being cautious and am ascribing only $300-400 million for Qualcomm's Omnitracs. And royalties go to the bottom line. A company that makes 150 million dollars profits with about 10 percent profit margin is likely to priced at least one time sales, corresponding to $1.5 billion for Qualcomm. This is without accounting for growth. Qualcomm's Eudora has 18 million users. That is 8 million more than America Online or Hotmail. You know the valuations of either. And now AOL users can se Eudora mail. $200 million is not excessive valuations. Even lower that to $100 milllion will not affect overall valuation too much. I have not included the R&D, patents etc., WLL, Globalstar etc. in the valuation. In any case, it is not necessary that fair price of the company is where it will trade at. Being 20 percent off (on either side of the fair price) is not uncommon. So buy at $40/share and sell at $58 a share for low risk. By the way, Ascend was trading at more than 10 time sales at point it was valued at $80 a share. Even at $30 a share it was around 4-5 times sales. Such valuations crash if the growth slows, and that is what happened with networking and Ascend in particular. With Qualcomm there is still some growth left over the next 4 years. Arun