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: JGoren who wrote (30297)	5/18/1999 11:21:00 PM
From: Rick	Respond to of 152472

I thought you might be interested in this posting I found on Yahoo: Salomon by: Jim_Bethesda (28/M/Austin, TX) 20561 of 20564 Salomon release today: QCOM: Impact of S Korea Net Add Concerns, if any, Immaterial Salomon Smith Barney Tuesday, May 18, 1999 --SUMMARY:--QUALCOMM, Inc.--Telecommunications Equipment * We continue to recommend QCOM w/a 1-H rating & a $150 price target. * Issue raised by a financial publication should not have a material impact on QCOM. * Royalties are accrued based on a 2 qtr avg of prior qtr actual & current qtr estimates. * Asia Pac accounted for 60% of net adds in 1998, but is estimated to account for only 30% in 1999. --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 09/98 EPS $0.29A $0.13A $0.14A $0.27A $0.82A Previous 09/99 EPS $0.30A $0.41A $0.67E $0.73E $2.12E Current 09/99 EPS $0.30A $0.41A $0.67E $0.73E $2.12E Previous 09/00 EPS $N/A $N/A $N/A $N/A $2.87E Current 09/00 EPS $N/A $N/A $N/A $N/A $2.87E Previous 09/01 EPS $N/A $N/A $N/A $N/A $3.75E Current 09/01 EPS $N/A $N/A $N/A $N/A $3.75E Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1H Prior:No Change Price (5/17/99).....:$108.75 P/E Ratio 09/99.....:51.3x Target Price..:$150.00 Prior:No Change P/E Ratio 09/00.....:37.9x Proj.5yr EPS Grth...:44.4% Return on Eqty 98...:48.9% Book Value/Shr(99)..:7.01 LT Debt-to-Capital(a)0.2% Dividend............:$N/A Revenue (99)........:3649.0mil Yield...............:N/A% Shares Outstanding..:159.0mil Convertible.........:No Mkt. Capitalization.:17294.1mil Hedge Clause(s).....: Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION------------------------------------------------------------------- We continue to recommend shares of Qualcomm with a 1-H rating based on our view that it is the best pure play in digital wireless. Qualcomm earns money selling ASIC chips based on its CDMA technology as well as mobile phones. However, the most profitable portion of its business is from royalty payments from virtually every manufacturer who sells any equipment based on CDMA technology. In an article today, issues were raised concerning Qualcomm's profitability in upcoming quarters as a result of concerns over mobile phone sales in South Korea. Specifically, South Korea witnessed a decline in net subscriber additions in April versus March. The decline was due to a change in government regulation, which as of April 1 disallowed the use of mobile phone subsidies. This resulted in an increase in the average price of a mobile phone handset of approximately $100. March net additions climbed from an average of 800,000 per month to greater than 1.3 million as users raced to buy phones before the elimination of the subsidies. In April, net additions have returned to normal at slightly shy of 800,000. We believe the impact on Qualcomm will be immaterial for three reasons. First, Qualcomm's royalties are accrued based on the average of the prior quarter actual and the current quarter estimate. By accruing its royalty payments in this manner Qualcomm smooths out any spikes that may occur. Secondly, in 1998 60% of CDMA subscriber net adds came from the Asia Pacific region, most of which were in South Korea. However, in 1999 we expect only 30% of CDMA net adds to come from the Asia Pacific region. Lastly, our CDMA growth assumptions for the Asia Pacific region are conservative because Korea continues to add subscribers, Japan has begun to add CDMA subscribers and China remains a wild card. Fred