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Regarding your question about the tax rate to use for both ROIC and WACC, I would make sure to use the same tax rate for both so you are comparing apples to apples. Again, for Atheros, the trick will be in finding a good tax rate going forward.

Also, take a look at Atheros' margins. Over the last three years both gross margin and operating margin have been steadily climbing, which would have the effect of increasing return on capital, assuming the capital base remained about the same. Find out why the margins have increased so much so quickly and if that growth is sustainable (it's probably not).

And that's the real trick. In a few days you'll be a master at knowing what all the inputs to ROIC and WACC are and where to find them, but the real devil that resides in the details is that all those inputs have to be examined for their sustainability and reliability going forward.

I find that these boards are a great resource for bouncing your ideas off of other people. Post to the Atheros-specific message board and see what other people following the stock think about your ideas and calculations. Third party criticism like that is SO valuable, expecially when you are just starting out.

Mike
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