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: Jeff Vayda who wrote (12065)	7/6/1998 9:54:00 AM
From: Gregg Powers	Read Replies (4) \| Respond to of 152472

Jeff: I hope people didn't misread my comments. My frustration and fear derive from the damage, financial and emotional, that likely will accrue to those who view the market as some kind of financial arcade game. There was some terrific wisdom in several of the responses to my post, and I worry less for this Forum's participants than I do for the retail public at large. Many people seem to be playing the market for "the action", to make daily gains, to "get rich quick" or a myriad of other specious agendas. I hear it from some of my clients, who given their net worth and sophistication, should know better. The market is a dangerous and volatile mistress under normal circumstances and given the Asian crisis, today's situation is far from normal. My point was that we are at a dangerous juncture, with the market's valuation parameters in uncharted territory and investors' expectations out in La-La land. When I see the speculation, and hear professional money managers capitulating to "the game", I scares me and it saddens me. Not to sound like a sanctimonious ass, but us investment professionals are paid too much, for doing too little, to abdicate our fiduciary obligations. As for QC, for all the hand-wringing that we do about the stock performance, the reality is that the company will probably earn $1.65 to $1.70 for FY98 and is therefore trading at 32x September 1998 earnings. This is not a ridiculously low PE multiple in light of the company's Asian exposure and manufacturing problems. Mind you, I am not saying that I think QC is correctly priced, but I am pointing out that the market is not totally irrational. Had Korea not "blown-up", I think QC would have earned $2.45-$2.65 this year, and the multiple applied to these earnings would likely have been higher (call it 35x to 40x), so the stock probably would have been between $90 and $100--for those with short memories, we were on our way there last February. But Asia happened, and all the handwringing in the world cannot change that. Looking forward though, I think we have substantial cause for optimism. FY98's two weak quarters are history, and the September quarter should exceed $0.50/shr. Brian Modoff is looking for $2.80 in FY99 (September 1999) and I think $3.20+ is doable. I appear to be anticipating a bigger swing from the infrastructure operation then Brian, and am probably giving QC more benefit of the doubt in the handset area, but regardless of whose point number is better, the direction is clear. And, it would appear that most of the alligators are out in the open (i.e. Korea won't surprise us again and management must fish-or-cut-bait in the handset business). So, from my vantage, I am fundamentally comfortable with QC, just like I am comfortable with the other major positions in our portfolio. Nevertheless, I will continue to worry about systemic market risk, because that is what I am paid to do. Best Regards, Gregg