Ring Register & Run After QualComm Stock Heats Up

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Mar 15 2007
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Qualcomm Inc. (Nasdaq: QCOM, stock) always give me the unexpected result whenever I invest in this stock. It will not think twice about giving you heart-attack, if you’re not ready to buy time-value during option trading. Though Qualcomm will gap-up after it beat earning estimate, most of the time it’s short-live. To add matter worse, the option normally has a high volatility. You need to have a sustainable trend to make real money.

So, there I was on Jan-24-2007 right before the earning with my research that pointed to a good quarter. It gapped-up for a short-while before dived into territory lower than before the earning announcement. It took another three more trading weeks to settle at the peak but $44 seems to be a strong resistance for it to breach. I didn’t sell at this profitable area and I was punished dearly for this mistake. It went into consolidation phase just above $39 before rebound. The good news set to come in then.

On Mar-13-2007, Qualcomm shares climbed after the chip maker raised its sales and earnings forecast for the coming quarter – sees revenue of $2.1 billion to $2.2 billion during the second fiscal quarter ending in June, compared to the previously forecast $2.0 billion to $2.1 billion. Earnings per share will be between 41 cents and 42 cents, compared to the 35-37 cents range previously forecast. The company thinks it will ship around 60-61 million Mobile Station Modem chips during the June quarter, compared to a prior estimate of 55-57 million units.

Investors have been watching Qualcomm’s sales closely as the company has been embroiled in legal battles. Cell-phone giant Nokia Corporation (NYSE: NOK, stock), a client whose license agreement with Qualcomm expires in April, 2007, claims Qualcomm is using Nokia’s 1,800 patents for wireless devices to extract outsize royalties on products. Meanwhile, Qualcomm’s chipmaker rivals, led by Broadcom Corp. (Nasdaq: BRCM, stock), say they are being denied licenses to key technologies at reasonable rates.

“Despite our view of near-term customer and legal risks with with respect to Nokia and other firms, we would hold QCOM shares,” said Standard & Poor’s equity analyst Ken Leon in a research note. Qualcomm also announced that it will increase its dividend from 12 cents to 14 cents per share for quarterly dividends payable after Mar. 30, 2007.

I didn’t think twice and close the position since I think this is the only chance for me to flee after the China and U.S. stock’s volatility. Too bad I can’t make 100 percent profit on this stock. Human can never run away from greed, can they?

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