Qualcomm Inc (QCOM)

[Jim Mullens]

k-qc, Re: ESO Expense Confusion/ BRCM-

Yes, "market" is still digesting BRCM's Q2 report. Goldman Sachs take per Yahoo-

>>>>>>>>>>

Here is what GS says....

BRCM (IL/N): Numerous product cycles driving strong results and positive outlook
April 21, 2006


Broadcom reported EPS $0.20 (operating)/$0.36 (ex ESO), ahead of GS $0.17/$0.33 and streets $0.34 (ex ESO). Broad product cycle momentum continues to drive strong business fundamentals with CQ1 sales +10% Q/Q (vs GS and street +6%) and CQ2 outlook +3% to +5%. We are raising EPS (inc ESO): 06 to $0.85 from $0.73 and 07 to $1.00 from $0.77; introducing 08 at $1.14. We favor names like Broadcom and Marvell (OP/N) with strong product cycles to drive outperformance despite potential cyclical headwinds for broader semis (potentially presaged by current inventory build through the supply chain), but maintain BRCM at IL/N as it already trades at premium, 54x 06 P/E (inc ESO) vs 29x group median, and uncertainty regarding how market will treat valuation post ESO inclusion, which is exacerbated by Broadcoms 44% estimated ESO dilution to 06 EPS, vs 17% avg for our coverage group.