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: SKIP PAUL who wrote (28108)	4/22/1999 3:54:00 PM
From: John Stichnoth	Read Replies (1) \| Respond to of 152472

At the risk of sounding flippant, your estimates may be too low. 5. Discount should be higher than 15%, in the present environment. It's higher than 15% for most companies. 4. PE of 30 in year 4 too low. Remember, it's a "gorilla" now, and gorillas receive a premium to market. Also, discounting out only 4 years might not be enough. CSCO's pricing discounts out to about 8 years (I've taken a similar approach with CSCO that you've done here). Where did you get the assumptions for 3 2 and 1?

To: SKIP PAUL who wrote (28108)	4/22/1999 4:06:00 PM
From: chinabull	Respond to of 152472

Where do you get this: 2. Average Profit per device in year 4 $10?

To: SKIP PAUL who wrote (28108)	4/22/1999 7:58:00 PM
From: David Peterson	Respond to of 152472

Your discount rate is probably too high. For QCOM I am currently using 9.75% as my discount rate. I think that this is conservative and a lower rate may be justified. To determine a reasonable discount rate, I start with the rate on 10 year treasuries and then add an equity premium, a sector premium, and then a company premium. Factors which tend to bring down my discounting percentage include size of the company, dividends (w/dividends your uncertainty on a return of your capital is reduced), the sector (tech stocks get a higher discount rate - you never know what someone will invent out in their garage), market position, quality of management, etc. I hope this helps.