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Subject:  Re: Gorilla with FUD--QCOM Date:  6/18/2000  5:08 PM
Author:  SlyAce Number:  2999 of 8806

At prices in the 60 dollar range, Gorilla Gamers, I would also imagine, should be snapping up shares like there is no tomorrow. Unless something fundamental has changed about this company, QCOM looks very attractive. Any thoughts?

Yes, I have a thought: either I am really, really smart or really, really stupid. I have been adding to QCOM during the recent slide and have done so with the knowledge that it very well might continue to go lower based upon its IBD accumulation/distribution rating of E, the fact that it is still in a downtrend, and the fact that volume is much higher on down days than it is on up days. The bottom line is that institutions are dumping QCOM. A little voice inside of me keeps saying before each buy, "don't do it." On the other hand, all this "news" strikes me as nothing more than FUD. The transition to 3G in China is inevitable and CDMA is the only game in town; 2G in China would have been nice, but it was not factored into current estimates anyway.

In the GG case study on CSCO, there is a 50% drop in 1994 after CSCO missed earnings (this is from memory, but I am pretty sure it is close). This is the only point in the CSCO game where more funds were added from external sources as opposed to from re-investing the proceeds from a basket of another game won by CSCO.
Here, QCOM's drop has not been caused by anything as drastic as missing earnings. Instead, there has been some arguably bad news relating to China and, most recently, one analyst who has always been bearish on QCOM lowered his price target. In short, there is nothing relating to the technology adoption life cycle that tells me that QCOM is not a gorilla worth holding for the long term. Since the GG is premised on the market underpricing the gorilla, I choose to add more at these levels even though the market is telling me not to do so. Time will tell is this turns out to be a big mistake.

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