Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: bdog who wrote (10911)	5/27/1998 1:25:00 PM
From: Michael Allard	Read Replies (1) \| Respond to of 152472

bdog: I think the reason it is undervalued is because Wall Street views QCOM as a manufacturing company, and expects appropriate margins. I think Gregg has been suggesting that the margins are better than the street perceives, (though I don't mean to put words in anyones mouth) and maybe this move will help clarify. The investments and partnerships that QCOM enters into w/ the wireless carriers are strategic in nature, designed to jumpstart QCOM's infrastructure business. But since many are startups, they will incur significant losses for a period of time (Like Nextel). By spinning it off, we allow wall street to view the startups as startups, and allow QCOM to report in a similar manner as other manufacturing companies. So with margins coming in line, and the infrastructure business about to take off (Mexico/Australia), maybe we will see the stock appreciation that QCOM deserves.

To: bdog who wrote (10911)	5/27/1998 2:19:00 PM
From: bananawind	Respond to of 152472

Bdog, you may be right, but a few points to consider... Hack an undervalued company into two pieces and both parts increase in value by virtue of the separation? Maybe not both, but the sum of both. Consider AT&T. T's market cap is presently about what it was just prior to the spinoff of Lucent and NCR. T's shareholders still have the $ value of T, but they also have the market caps of LU and NCR. Even adjusted for growth in the business in the intervening year, T's shareholders are up at least $50 billion. Not that Q's spinoff is anything like LU, but lots of development stage wireless company's have market caps well above book. It is doubtful these operations presently add more than a buck or so to the company valuation as practiced on the street today. Isn't the parent still going to be funding the child? No reason to think so. As a publicly traded company there is no reason the "child" can't access the capital markets directly. Aren't competitors going to realize that its really still Qualcomm? In what way? The ownership base is likely to be substantially altered and the employees would have no connection to QCOM other than possibly as shareholders. Again, Lucent comes to mind. Isn't the competitor thing exactly why the LU transaction was done and one reason why it was so successful? If I am an operator considering cdmaOne infrastructure vendors, do I really care that another competing operator was spun out from QCOM? Only if I think QCOM is somehow subsidizing or giving a continuing unfair advantage to my competitor. This move by QCOM may also signal that the infrastructure business is about to grow up and join the big boys at the feeding trough. Of course, this is all speculation and I have no firsthand information. Hopefully, management will hold a conference call when their plans are a little more advanced. -JLF