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Here is a "valuation" comparison of companies largely
considered to be gorillas or at least very powerful
kings.  According to the Gorilla Game the gorilla 
should be awarded a higher valuation than participants
in royalty games, but for this simple comparison I
lumped them all in together.

The Gorilla Game asserts P/S is a much better 
valuation tool than the traditional P/E.  It seems to
me P/S has been breaking down as of late with some 
very large numbers being awarded to companies such as
Qualcomm and JDS Uniphase.

What I decided to do, because P/S showed very little
pattern and seems most useful when comparing companies
in similar sectors, was to combine P/S with long term
growth estimates.  Consider this a P/S version of
YPEG.  For simplicity I refer to P/S over growth as 
PSG.  My premise is P/S comparisons of companies from
different sectors are more relevant if tempered by

Conceptually I am trying to get a little closer
to "CAP" than straight P/S does.  Yes we are paying
up for competitive advantage.  But I don't believe we
pay up with regard to P/S unless we believe the long
term growth rate is high (which of course is largely
aided by competitive advantage).

Enough rambling.  Here are the numbers:

               P/S  Est LT Growth   PSG 
              ----  -------------  ----
Qualcomm      24.3    37.34        0.65
Intel         13.5    19.41        0.69
Oracle        19.8    24.64        0.80
Microsoft     24.0    24.69        0.97
Siebel        40.8    41.11        0.99
Cisco         32.1    29.46        1.09
Net Appliance 72.3    48.38        1.50
Rambus       117.3    75.00        1.56
JDSU          97.5    43.67        2.23

PSG = P/S divided by Estimated LT growth

The first thing which jumps out at me is how 
undervalued Qualcomm appears to be, and how
overvalued JDSU is in comparison.  

Before I start an uproar I will disclose I own JDSU
and am very pleased with Wall Street's valuation.  And
I am well aware the growth prospects are analyst
estimates only.  I firmly believe Qualcomm will exceed
this growth rate.  And I am totally convinced JDSU's
LT growth rate is in excess of 50% bare minimum.  What
are we looking out, 5-7 years?  I'd say JDSU is still
growing at 70%.  That would make the PSG = 1.39, much
more reasonable but still twice the valuation of 

So much for the "Qualcomm is grossly overvalued" 

This is just an off the cuff compilation.  I apologize
if your favorite gorilla/king is not on the list.  I
also apologize if you feel I listed a company which
does not belong in the Simian or Royalty games.

I do realize the LT growth rates are in reference to
total earnings potential, not just revenue.  But for
these purposes I believe it is close enough.  And I do
not pretend to believe P/S over growth is a can't lose
evaluator.  It's just an experiment.  Any comments

Fool on.


co-posted to QCOM and JDSU boards
Full Disclosure - among this list I have ownership in

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