Summer 2013 Sector Team
Neil Patel
Jeffrey Mulac
Srinath Potlapalli

As of 6/30/2013
1.60% 2.10% 3.92% 0.08%
0.22%
14.43%
16.85%
SIM Weight
13.25%
7.57%
13.86%
12.14%
13.99%
3.30%
3.30%
2.80%
17.80%
10.20%
12.70%
0.00%
0.00%
12.20%
S&P 500 Weight
10.50%
10.50%
16.70%
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
Cash
Dividend Receivables
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
Cash
Dividend Receivables

• Overweight IT Sector in SIM portfolio by 100-200 bps above the S&P 500 weightage.
• Increase IT Sector allocation by a total of 200-300 bps
• Why?
– IT Sector is underperforming the market by 9% YTD* (buying opportunities)
– Continued IT Sector growth in the future
– Improving economic conditions in the U.S.
*http://us.spindices.com/indices/equity/sp-500
•
Overweight:
– Application and Systems Software (big data software growing in demand)
– Hardware (mobile sales continue to grow)
– Internet Software and Services (cloud computing)
•
Underweight:
– PC semiconductors and equipment (decreasing demand)
– PC hardware (decreasing demand)
– IT consulting & services

Data as of 7/19/13
Source: finance.yahoo.com
Company Overview:
Industry: Semiconductor
Ticker: INTC
Current Stock Price: $23.04
52-Week Range: $19.23-$26.90
Market Capitalization: $114.53B
Shares Outstanding: 4.97B
Beta: 0.99
Dividend Yield : 0.9(3.8%)
2012 Revenue:
2012 Earnings:
$53.34B
$11B

• Among stocks in the current SIM IT Portfolio Intel is the only company with major revenue/earning stream from declining PC industry
Key Business Drivers:
• Corporate and Government IT Spending. Intel is a highly cyclical stock.
• Global demand for chips and competition from foreign suppliers such as ARM.
• PC/Notebook Demand both in domestic and international markets.
• R&D and Innovation.
• Falling PC and chip prices coupled with R&D spending impact margins.
• Data Center growth coupled with the proliferation of cloud computing.
• Growth in mobile device,smartphone and tablet sectors.

Stock Performance:
•
Intel stock performed well during the past year due to growing business in Data Center Group and expansion in software service arena
• Intel’s earnings might decline to rapid fall in demand for PC’s in the global market.
•
Intel has been a late mover into mobile computing sector which is limiting its stock performance.
• With high capex budgets and deteriorating PC demand Intel’s stock price may decline in the near term.
For FY2013 Q2 :
• Intel reported 39cents a share vs Analyst consensus of 40 cents.
• Intel to cut down its capex and focus more on growing mobile device sector under the new management.
/ .
Recent earnings report: http://www.cbsnews.com/8301-505124_162-57594230/a-big-miss-for-intelearnings/

• Year
.
Revenue
% growth from prior year
Earnings Per Share
Current
Year
Current+1 estimate
53,341
-1%
53,583
0%
1.87
-16%
Current+2 estimate
55,880
4%
2.03
8%
Current
+3 estimate
57,886
4%
2.05
1%
Source: Baseline
• Revenue and earnings forecast for Intel are sluggish in the near term
• Intel is expected to grow in mobile and cloud computing with new technologies
% growth from prior year
2.24
-12%
Intel vs ARM – Financial Ratios (source: www.morningstar.com)
Financial Ratio 2012 2011 2010 2009 2008
Financial Ratio 2012 2011 2010 2009 2008
(INTEL)
(ARM)
32.7
38.2
40.8
73.9
61.2
Payout Ratio % 40.8
32.7
31.3
72.7
59.5
Payout Ratio %
0.09
0.13
0.13
0.07
0.07
Free Cash Flow
Per Share
Capital
Spending($b)
Net Margin (%)
1.52
1.85
2.02
(11.0
2)
(10.7
6)
(5.207
)
1.18
1
(4.51
5)
(5.19
7)
20.63
23.97
26.28
12.44
14.08
Free Cash Flow
Per Share(GBP)
Capital
Spending(gbp mill)
Net Margin (%)
(26)
27.86
(13)
22.9
(7) (10) (14)
21.14
13.26
14.58
ROE (%) 22.66
27.15
25.16
10.82
12.93
ROE (%) 14.18
11.52
10.53
5.47
7.06

Relative to
S&P 500
Hig h
Current High Low Median Low Media n
Absolute
Valuation
Current Target
Multiple
Target E,
S, B, etc/Share
P/Trailing E 2.6
0.59
1.1
0.73
P/Forward E 2.9
0.69
1.1
0.83
A.
B.
P/Forward E 35.7
C.
8.4
17.1
D.
E.
12.5
17.1
F.
1.87
G.
P/B 1.9
0.9
1.2
0.9
P/S
P/CF
5.3
1.4
2.2
0.6
2.6
1.1
1.5
0.6
P/S 8.3
1.8
3.2
2.2
3.2
10.78
High Low Median Current Relative to
Industry
P/B
P/EBITDA
6.2
23.1
1.8
4.31
3.0
9.15
2.3
5.62
3.0
9.15
10.3
4.25
Target
Price (F x
G)
H.
31.97
34.49
30.9
38.93
P/Trailing E
P/Forward E
P/B
P/S
P/CF
1.1
1.1
1.2
1.3
1.4
.48
.07
0.7
0.9
0.6
.84
.84
1.0
1.1
0.9
.72
.81
0.9
0.9
0.7
P/CF 25.5
5.1
10.2
6.6
10.2
4.06
40.64
Valuation of price multiples indicate that Intel is valued below
S&P 500 and the Industry likely due to sluggish PC demand forecast.
Target Price of Intel based on median historic P/E multiple is
$31.97.

Discount Rate = 11.5%
Reasons for the Assumption:
• Intel is a cyclical tech stock
•
Uncertainty in growth
• Decline in core PC business
FCF Growth Rate = 5%
Reasons for the Assumption:
•
Intel is leading in booming
Data Center business
• Intel has a good chance to
capture the mobile device
market
• Great corporate Governance
and brand Image
9.0%
Discount
Rate
9.5% 10% 10.5% 11% 11.5% 12.0%
2.5% $31.02
$28.65
$26.6
$24.82
$23.24
$21.85
$20.60
3.0% $32.63
$29.98
Growth
Rate
3.5% $34.54
$31.53
4.0% $36.83
$33.36
$27.71
$25.74
$24.03
$22.52
$21.18
$28.98
$26.81
$24.92
$23.27
$21.82
$30.47
$28.03
$25.94
$24.13
$22.25
4.5% $39.63
$35.56
$32.23
$29.46
$27.11
$25.11
$23.37
5.0% $43.13
$38.25
$34.34
$31.15
$28.49
$26.24
$24.31
5.5% $47.63
$41.61
$36.92
$33.17
$30.11
$27.55
$25.40
6.0% $53.64
$45.93
$40.14
$35.65
$32.05
$29.11
$26.66

INTEL(INTC)
Srinath Potlapalli
6/11/2013
Year
Revenue
% Growth
Operating Margin
Operating Margin
Gains(losses) on equity investments,net
% Growth
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
% Growth
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares Outstanding
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Debt
Cash
Cash/share
Terminal
Discount Rate = 11.5%
2012E 2013E 2014E 2015E
Terminal FCF
Growth =
2016E
5.0%
2017E 2018E 2019E 2020E 2021E 2022E
53,341 53,623 54,914 57,342 60,782 64,429 68,295 72,051 76,014 80,194 84,204
0.5% 2.4% 4.4% 6.0% 6.0% 6.0% 5.5% 5.5% 5.5% 5.0%
14,638 13,406 13,179 13,189 13,372 14,174 15,366 16,211 17,483 18,445 19,367
141.00
27.4% 25.0% 24.0% 23.0% 22.0% 22.0% 22.5% 22.5% 23.0% 23.0% 23.0%
150.0 150.0 150.0 182.3 193.3 204.9 216.2 228.0 240.6 252.6
94
0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
100 100 100 106 112 119 126 133 140 147
0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
3,868 3,551 3,492 3,494 3,552 3,765 4,079 4,304 4,639 4,895 5,139
26.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0% 26.0%
11,005 10,105 9,938 9,945 10,109 10,715 11,611 12,249 13,204 13,931 14,627
7,522
14.1%
(754)
-8.2%
7,546
14.1%
729
-1.7%
10,764
19.6%
(116)
0.1%
11,027
19.2%
(218)
1.7%
11,852
19.5%
(365)
6.0%
12,564
19.5%
(387)
8.4%
13,317
19.5%
(410)
5.5%
14,410
20.0%
(432)
7.8%
15,203
20.0%
(456)
5.5%
16,039
20.0%
(481)
5.0%
16,841
20.0%
(505)
-1.4%
11,027
20.7%
6,746
58,575
1.4%
11,100
20.7%
7,280
7.9%
43%
-0.2%
11,367
20.7%
9,219
26.6%
-0.4%
11,870
20.7%
8,884
-3.6%
-0.6%
12,156
20.0%
9,440
6.3%
-0.6%
12,886
20.0%
10,006
6.0%
-0.6%
13,659
20.0%
10,860
8.5%
-0.6%
14,410
20.0%
11,817
8.8%
-0.6%
15,203
20.0%
12,748
7.9%
-0.6%
16,039
20.0%
13,449
5.5%
-0.6%
16,841
20.0%
14,122
5.0%
76,811
135,386
57%
100%
Terminal
Value 228,123
5.34%
Free Cash
Yield 6.19%
11.5
12.3
12.5 12.7
13.4 13.6
5.9
6.3
5,160.0
$ 24.46
$ 26.24
7.3%
13,448
8,478
1.64
6.3 5.5
6.7 5.9
Current Price: $24.46
Target Price: $26.24
Upside to DCF: 7.3%
Based on an upside price of 7.3%,decline in global PC demand and a slowdown in emerging markets Intel is SELL
Terminal P/E 15.6
Terminal
EV/EBITDA 6.4

•
Impressive growth in stock value over the past year. Led by a new CEO.
•
Stable large cap stock with little downside and projected to have a good run with cloud computing business.
•
Expected earnings growth due to global expansion.

• Oracle’s core products are part of server infrastructure and its business growth is not impacted by decline in PC business.
• Growing revenue in cloud computing subscriptions.
• Oracle purchased Application software such as Peoplesoft, JD Edwards,
Seibel, Hyperion, Java, Sun etc; to strengthen its database business.
• Oracle has made several acquisitions that should help it position well in he growing cloud computing business.
• Oracle’s core strategy is to integrate Database, Hardware and Server platforms into one single engineered platform and deploy them across the data centers.

ORACLE(ORCL)
Srinath Potlapalli
6/11/2013
Year
Revenue
% Growth
Operating Margin
Operating Margin
Gains(losses) on equity investments,net
% Growth
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
% Growth
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares Outstanding
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Debt
Cash
Cash/share
88,347
101,593
189,940
8.37%
47%
53%
100%
Terminal Discount
Rate = 11.0%
2012E 2013E 2014E 2015E
Terminal FCF
Growth =
2016E
4.3%
2017E 2018E 2019E 2020E 2021E 2022E
37,121 37,180 38,072 39,595 41,377 43,446 45,835 48,356 50,774 53,313 55,978
0.2% 2.4% 4.0% 4.5% 5.0% 5.5% 5.5% 5.0% 5.0% 5.0%
13,705 14,682 15,035 15,636 16,340 17,157 18,100 19,096 20,056 21,059 22,111
36.9% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5% 39.5%
20.00
0.1%
20.00
0.1%
20.00
0.1%
20.00
0.1%
20.00
0.0%
20.00
0.0%
20.00
0.0%
20.00
0.0%
20.00
0.0%
20.00
0.0%
20.00
0.0%
(800) (800) (800) (800) (836) (878) (926) (977) (1,026) (1,077) (1,131)
-2.2% -2.2% -2.1% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0%
2,981 2,973 3,279 3,417 3,570 3,749 3,955 4,172 4,381 4,600 4,830
23.0% 21.4% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0%
9,954 10,929 10,976 11,439 11,953 12,550 13,240 13,967 14,668 15,401 16,170
2,800
7.5%
9.8%
2,800
7.5%
0.4%
2,800
7.4%
4.2%
2,800
7.1%
4.5%
2,800
6.8%
5.0%
2,800
6.4%
5.5%
2,800
6.1%
5.5%
5.8%
2,800
5.0%
2,800
5.5%
5.0%
2,800
5.3%
5.0%
2,800
5.0%
(380)
-1.0%
20
0.1%
12,354
(380)
-1.0%
20
0.1%
13,329
7.9%
(380)
-1.0%
30
0.1%
13,366
0.3%
(380)
-1.0%
30
0.1%
13,829
3.5%
(380)
-0.9%
40
0.1%
14,333
3.6%
(380)
-0.9%
40
0.1%
14,930
4.2%
(380)
-0.8%
50
0.1%
15,610
4.6%
(380)
-0.8%
50
0.1%
16,337
4.7%
(380)
-0.7%
50
0.1%
17,038
4.3%
(380)
-0.7%
60
0.1%
17,761
4.2%
(380)
-0.7%
60
0.1%
18,530
4.3%
Terminal Value
Free Cash Yield
288,465
6.42%
Terminal P/E 17.8 14.8 13.5 13.4
19.1 17.4 17.3
9.2 8.7 8.5
11.7 11.1 10.9
4,630.0
Terminal EV/EBITDA 11.7
$ 31.86
$ 41.02
28.8%
18,852
14,955
3.23
As of 7/21/13
Current Price: $31.86
Target Price: $41.02
Upside: 28.8%

Industry: Electronic Components & Equipment
(specialty glass & ceramics)
Current Price: $15.03
52 wk range:
Market Cap:
Shares outstanding:
Beta:
Div (yield)
$10.62 - $16.43
22.3B
1.48B
1.76
0.40 (2.7%)
Revenue:
Earnings:
SIM weight (June 2013):
$8.012B
$1.7B
3.93%

2012 Revenue
Other
0.1%
Life Sciences
8.2%
Specialty Materials
16.8%
Environmental
Technologies
12.0%
Display Technologies
Telecommunications
26.6%
36.3%

• Innovator of diverse products and uses – customers/partners include Apple,
Samsung, Sony, Dow Chemical, Verizon, AT&T
Business Drivers
• R&D and innovation
• Consumer spending: TVs, smartphones, tablets, cars
• Capital spending: auto & truck manufacturing, cable and internet lines
• Multi-use application of products
– Gorilla Glass in windshields
– Willow Glass as roofing shingles, iWatch?
– View Inc. collaboration
Risks
• Loss of a top ten customer (50% of total revenue in 2012)
• Struggling international economies
• Declining LCD TV prices
• Supplier/materials loss

• Stock is up 25% since July 21, 2012; outperforming S&P by 50 bps YTD
• Revenues are at all time highs and earnings are beginning to come around – acquisitions have hindered income
• Declining LCD TV prices offset by improved fusion manufacturing process for glass (earnings up
4.2% in Q1 2013)
• Life Sciences division growing due to expansion into China and India

Relative to
S&P 500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
6.3
6.5
2.6
5.9
3.9
Low Median Current
0.41
0.57
0.4
1.7
0.6
0.89
0.99
0.9
3.7
1.2
0.73
0.75
0.4
1.9
0.7
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
3.0
1.2
0.9
2.2
1.4
Low Median Current
0.31
0.64
0.4
0.7
0.6
0.82
0.89
0.7
1.3
0.8
0.81
0.82
0.7
1.0
0.8

• Discount Rate: 12%
– Corning, like industry very cyclical
– Decline in LCD prices
– Innovative products, but risk with new product R&D paying off
• Growth Rate: 4.5%
– Huge potential with many products: Gorilla Glass, Willow Glass, Advanced
Dynamic Glass
– Solid management with focus on R&D
– Acquisitions of Life Sciences labs has increased growth potential in segment

• Current Price: $15.03
• Target Price: $19.22
• Potential Upside: 27.2%
BUY
75 bps

Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
6.4
3.5
2.2
4.4
6.4
Low Median Current
1.1
0.92
0.4
0.8
1.1
1.6
1.6
1.2
2.6
2.4
1.1
1.0
1.1
1.7
1.2
Relative to
S&P 500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
Absolute
Basis
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
161.5
76.2
11.9
8.3
82.6
Low
9.5
9.6
1.7
1.2
8.4
Median
29.8
25.7
5.5
4.0
29.8
Current
10.2
10.7
3.4
2.4
9.0
High
8.1
4.1
4.3
5.3
7.6
Low Median Current
0.62
0.67
0.6
0.8
0.8
1.8
1.7
2.4
3.1
3.0
0.63
0.7
1.4
1.6
0.9

Positives
• Top innovator for consumer electronics
• $60B share buyback plan to boost share price (by end of 2015)
• Products
– Per Tim Cook – new hardware, software and services to be unveiled in Fall 2013 and in 2014 (FY end 9/2013)
– Lower-end iPhone and iPad to steal market share from Samsung
– Larger screen iPhone and iPad to gain consumers
– iWatch
Negatives
• Can they produce profitable innovation in post-Jobs era – next big device?
• Down 19.6% YTD compared to S&P up 18.8%
• Google, Samsung consistently gaining ground

Apple (AAPL)
Year
Revenue
% Grow th
Operating Income
Operating Margin
Interest Income
Interest Inc as % of sales
Other Income, net
Other Inc as % of sales
Interest
Interest % of Sales
Taxes
Tax Rate
Net Income
% Grow th
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
% Grow th
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares Outstanding
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Debt
Cash
Cash/share
Terminal Discount Rate =
Terminal FCF Growth =
12.5%
5.0%
2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
170,803 186,229
9.0%
197,662
6.1%
212,487
7.5%
226,298
6.5%
241,008
6.5%
253,058
5.0%
265,711
5.0%
278,997
5.0%
292,946
5.0%
307,594
5.0%
56,400
33.0%
57,100
30.7%
62,000
31.4%
65,871
31.0%
70,152
31.0%
74,712
31.0%
75,917
30.0%
79,713
30.0%
83,699
30.0%
87,884
30.0%
92,278
30.0%
11
0.0%
17
0.0%
18
0.0%
425
0.2%
453
0.2%
482
0.2%
506
0.2%
531
0.2%
558
0.2%
586
0.2%
615
0.2%
550
0.3%
562
0.3%
575
0.3%
6,800
3.2%
7,242
3.2%
7,712
3.2%
8,098
3.2%
8,503
3.2%
9,486
3.4%
9,960
3.4%
10,458
3.4%
(161) (188)
-0.1% -0.1%
(198)
-0.1%
(212)
-0.1%
(226)
-0.1%
(241)
-0.1%
(253)
-0.1%
(266)
-0.1%
(279) (293)
-0.1% -0.1%
(308)
-0.1%
(158) (143)
-6.9% -6.0%
(148)
-6.0%
(4,373)
-6.0%
(4,657)
-6.0%
(4,960)
-6.0%
(5,056)
-6.0%
(5,309)
-6.0%
(5,608)
-6.0%
(5,888)
-6.0%
(6,183)
-6.0%
40,993 43,764
6.8%
47,637
8.8%
49,297
3.5%
53,859
9.3%
57,842
7.4%
60,987
5.4%
63,771
4.6%
66,959
5.0%
70,307
5.0%
73,822
5.0%
4,500
2.6%
5,587
3.0%
5,930
3.0%
6,375
3.0%
6,789
3.0%
7,230
3.0%
7,592
3.0%
7,971
3.0%
8,370
3.0%
8,788
3.0%
9,228
3.0%
0.0%
10,000
5.9%
0.0%
10,988
5.9%
0.0%
9,685
4.9%
-1.0%
9,562
4.5%
-1.0%
11,541
5.1%
35,493
277,320
278,483
555,804
8.91%
38,363
8.1%
43,881
14.4%
46,110
5.1%
49,107
6.5%
50%
50%
100%
-1.0%
11,809
4.9%
-1.0%
13,412
5.3%
53,263
8.5%
55,167
3.6%
-1.0%
15,411
5.8%
56,331
2.1%
-1.0%
16,740
6.0%
58,589
4.0%
-1.0%
17,577
6.0%
61,519
5.0%
-1.0%
18,456
6.0%
64,595
5.0%
Terminal Value 904,325
Free Cash Yield 7.14%
Terminal P/E 12.3
Terminal EV/EBITDA 8.9
9.7
13.6
6.5
9.1
9.1
12.7
6.3
8.8
8.4
11.7
5.8
8.2
938.7
$ 424.19
$ 592.13
39.6%
3,382
4,988
5.31
4.5%
4.75%
5%
5.25%
5.5%
12.0
610.82
622.23
634.45
647.58
661.72
12.25
590.92
601.38
612.56
624.54
637.41
Discount Rate = 12.5%
Growth Rate = 5%
Current Price:
Target Price:
Potential Upside:
SIM Weight (June 2013):
12.5
572.26
581.88
592.13
603.09
614.84
HOLD
12.75
554.74
563.58
573.02
583.07
593.81
$424.19
$592.13
39.6%
4.6%
13.0
538.25
546.42
555.09
564.33
574.18

Company Overview (as of 7/23/2013):
Ticker:
Industry:
Current Price:
Communication Equipment
52-Week Price Range:
Market Cap:
QCOM
$62.30
$56.30-$68.50
$107.6B
1.17 Beta:
Dividend (Yield):
FY 2012 Revenue:
FY 2012 Earnings:
$1.40 (2.3%)
$19.121B
$6.109B

Catalysts:
• Qualcomm chips are used in a majority of smartphones, with enormous growth potential in Asia.
•
The number of 3G/4G connections is expected to reach 4B by 2016, up from 1.9B currently.
• Qualcomm carries no long-term debt on its balance sheet.
•
Qualcomm recently increased its cash dividend and share repurchase program.
• The stock has underperformed the S&P 500 by almost 20% YTD, signaling undervaluation.
Risks:
•
The smartphone market is becoming saturated in developed countries, particularly the U.S.
• Qualcomm is solely dependent on global growth in mobile sales.
• Competition in the industry will continue to intensify, driving ASP’s lower over time.
• As the world transitions from 3G to 4G/LTE over the longterm, Qualcomm’s royalty revenue per device will decrease.

Key Statistics
Market Capitalization:
Revenue (mrq):
Revenue Growth (YoY):
Current Ratio:
Net Cash:
% LT Debt/Total Capital:
Operting Margin:
ROE:
PEG Ratio (5 yr expected):
Qualcomm
Texas
Instruments Broadcom NVIDIA
$106.9 billion $42.0 billion $19.9 billion $8.5 billion
$6.1 billion $2.9 billion $2.0 billion $955.0 million
24% -8% 10% -9%
3.4
2.6
2.3
5.0
$12.4 billion $(221) million $981 million $3.7 billion
N/A
30.4%
20.7%
0.75
27.6%
20.9%
16.8%
2.88
14.8%
10.9%
22.4%
0.80
• Qualcomm has an advantage over its competitors in nearly every category
• Current and PEG ratios
0.4%
13.9%
15.1%
1.67

• Buy 75bps
• Increase current holding to
4.62%
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares outstanding
Current price
Implied equity value/share
Upside/(downside) to DCF
15.67
19.03
8.22
10.57
1,763
$ 62.30
$ 75.65
21.4%

Sensitivity Analysis
Growth
Rate
4.0%
Discount Rate
10.00% 10.50% 11.00% 11.50% 12.00%
$ 80.87
$ 74.48
$ 69.01
$ 64.27
$ 60.13
4.5% $ 85.46
5.0%
5.5%
$
$
90.96
97.69
6.0% $ 106.10
$ 78.21
$ 82.61
$ 87.90
$ 94.36
$
$ 75.65
$ 79.88
$
72.08
84.96
$
$
66.82
$ 69.77
$ 73.21
77.27
$ 62.28
$ 64.73
$ 67.56
$ 70.86
Discount Rate = 11%
• Qualcomm is a cyclical company
• Dependence on global economy (China)
Terminal Growth Rate = 5%
• Qualcomm is leader in cellular baseband processor market
• Mobile sales will continue to grow

Company Overview (as of 7/23/2013):
Ticker:
Industry: Internet Software & Services
Current Price:
52-Week Price Range:
Market Cap:
GOOG
$903.76
$604.34-$928.00
$301.1B
1.15 Beta:
Dividend (Yield):
FY 2012 Revenue:
FY 2012 Earnings:
N/A (N/A)
$50.175B
$10.737B

• Hold
• Current holding is 4.45%
• As price appreciates, holding will reach SIM max of 5%
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares outstanding
Current price
Implied equity value/share
Upside/(downside) to DCF
20.77
23.19
14.35
16.02
333
$ 904.13
$ 1,009.39
11.6%

Sensitivity Analysis
10.50%
4.5% $ 1,081.72
Growth
Rate
5.0% $ 1,147.55
5.5% $ 1,226.56
6.0% $ 1,323.12
6.5% $ 1,443.82
11.00%
$ 991.30
Discount Rate
11.50%
$ 913.99
12.00%
$ 847.17
$ 1,044.79
$ 1,108.00
$ 1,183.86
$
$
$
958.02
1,009.39
1,070.10
$
$
$
883.83
926.12
975.46
$ 1,276.58
$ 1,142.96
$ 1,033.78
12.50%
$ 788.86
$ 819.68
$ 854.89
$ 895.52
$ 942.92
Discount Rate = 11.5%
• Majority of revenue is derived from online advertising
• Google receives lower advertising revenue on mobile devices
Terminal Growth Rate = 5.5%
• Google is the leader in innovation (20% time)
• Google will continue to improve the ways in which people access information

Company Industry % of SIM Assets Decision to
Hold/Sell/Buy
Apple Inc
Google Inc
Hardware/Electronic
Equipment
4.6%
Internet Software & Services 4.45%
Intel Inc Semiconductor
QualComm Inc CommunicationEquipment
Corning Inc Diversified Electronics
Oracle Corp
N/A
3.87%
3.93%
System Software/ Application
Software
N/A
Hold
Hold
Sell
Buy 75 bps
Buy 75 bps
Buy 150 bps