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

To: quidditch who wrote (28206)	4/23/1999 5:13:00 PM
From: Ruffian	Respond to of 152472

Good Article On The GORILLA> From the April 26, 1999 issue of Wireless Week Qualcomm Stock Hits New Highs By Monica Alleven Without an infrastructure business, Qualcomm Inc. looks a whole lot better. It looks so good, in fact, its stock shot up more than 54 points one day last week, hitting an intra-day high of $198 after the company reported better than expected second-quarter earnings. How much better? Well, analysts anticipated earnings per share to fall around 59 cents. But on a pro-forma basis, which shows what Qualcomm's results would look like if it took out non-recurring charges and operating results related to its infrastructure unit, earnings were $1.20 per share. "What we found out was this infrastructure company was much worse than anyone had ever thought, and the other parts of the business were much better than people had thought," said Pete Peterson, senior analyst at Volpe Brown Whelan & Co. in San Francisco. Essentially, Qualcomm will no longer be the same company after it completes the sale of its infrastructure unit to Ericsson Inc. next month. Qualcomm built that business for a worldwide scope and opened a factory to handle a large volume of customers, but it never received the number of contracts it needed to make the business successful. Yet the unit is not considered a lemon for Ericsson, which has the financing, scale and experience to make a go of it. Plus, Ericsson previously lacked a code division multiple access infrastructure product. Besides the infrastructure deal, the two longtime rivals in March agreed to jointly support a single world CDMA standard, settled legal disputes and signed cross-licensing agreementsevents that contributed to what Qualcomm Chairman and CEO Irwin Jacobs called a "pivotal" quarter in the company's 14-year history. The San Diego company saw strong sales in CDMA handsets, application-specific integrated circuits and OmniTRACS satellite units. Qualcomm also squirrelled away $77 million in license, royalty and development fees, representing a significant portion of its revenue. Given those sales and royalties, CDMA is poised for greatness, according to CDMA proponents. Without the financial drain of the infrastructure business, "the true earnings power of the company has now been revealed," said Dick Grannis, vice president and treasurer at Qualcomm. "It's coming from the success of CDMA technology." The company shipped 1.7 million CDMA phones in the quarter and 9 million trademarked MSM phone chips, up from 5 million chips in the December quarter. The chips are used in CDMA phones, so if manufacturers were to use every chip, theoretically there could be an influx of about 9 million more CDMA phones into the worldwide market within the next few months. Meanwhile, Wall Street's favorable reaction came despite Qualcomm's non-adjusted net loss of $43 million, or 59 cents per share. Generally, the Street looks at operating income to measure the relative performance of a company and its management as opposed to net income, which includes one-time items that might not reflect the company's true value. Operating income, excluding non-recurring charges, more than doubled, increasing 125 percent to $115 million compared to $51 million during the year-ago quarter. Operating income as a percent of revenues also nearly doubled in the second quarter. Boosted by high CDMA handset sales by carriers, Qualcomm's roller-coaster ride took its stock to levels beyond those of well-known companies such as America Online Inc. and Intel Corp. Given the momentum, can the stock go much higher? Some analysts think so. BT Alex. Brown Inc. analysts call for a target price of $200 before a split.