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: Clean who wrote (11020)	6/1/1998 8:04:00 PM
From: Gregg Powers	Read Replies (1) \| Respond to of 152472

Clean: Don't apologize...I completely agree that management's obligation is to maximize shareholder value. Our attitude toward a corporate event probably (hopefully) differ because of my proximity to, and familiarity with, the many nuances surrounding Qualcomm. Although I am no stranger to controversial or misunderstood investment ideas, I have never before witnessed such a dichotomy between internal reality and external perception. With regard to your question, Qualcomm has done better than some techs with Asian exposure and worse than others. Many semiconductor capital equipment companies are down by 50% or more, as are some telecom component suppliers. Qualcomm has substantially underperformed the more diversified telecom equipment suppliers such as Lucent, Nortel, Nokia or Ericsson. But, and I take little comfort in this, our mighty "Q" has handily outperformed Motorola...but that and $0.25 won't buy you a cup of coffee. As I have said repeatedly, given the events since February, it is easily to forget Qualcomm's strong first quarter results. I continue to remind everyone about the December quarter because it provided our first glimpse of the company's underlying earnings power (and Wall Street's reaction to the same). With the stock sagging as the Street rediscovers the crisis in Asia, it is probably necessary to recall Qualcomm's Korean business has two elements: domestic consumption and foreign export. While Korea's domestic subscriber growth has surpassed my recent expectations, it is important to note that Samsung, LG Electronics and others (such as Pantech) are ramping up their export sales are rapidly as possible. When you begin factoring export into the equation, analysis of Qualcomm's Asian "exposure" (or opportunity) becomes far more complicated. More to the point, Korea's impact on Qualcomm's second and third quarter was so pronounced primarily because it was so unexpected. While the company generated $760mm in revenue during the March quarter, it was the shortfall from planned revenue, rather than some permanent structural margin impediment, that exacerbated the profit shortfall. With Asia now firmly baked into the business plan, I would expect the company's profits to begin a sharp recovery beginning with the September quarter. That is why I am concerned that an acquisition of the company in the near-term would rob us of the opportunity to capitalize on the franchise's underlying earnings power. Hope this helps. Gregg P.S. Maurice, I am quite envious of your writing skills. Your clever prose and an excellent command of the King's English always provide interesting and insightful reading.