To All: I have received a response from Qcom asking for an explanation of their announcement of an extraordinary sale of 4M new shares to the Index Funds:
Dear <Uncle Frank>:
We believe this is a great opportunity for QCOM to raise capital to
help fund its growth and manage its business. The public offering of primary shares is actually expected to be accretive to earnings because of the interest income generated from investing the proceeds. The most possible dilution is 2-3%, a minor amount.
Best Regards,
Julie Cunningham
Vice President, Investor Relations
For those of you how didn't see it, here is a repost of my letter to Julie:
Julie Cunningham
Vice President, Investor Relations
QUALCOMM
juliec@qualcomm.com
Dear Julie, I am a Qualcomm shareholder, and am also a member of a discussion thread on Silicon Investor, where Qualcomm's every move is discussed and analyzed. I have been very pleased with Qualcomm's
development and growth, and was very excited when they were selected to the s&p500 last week. But today's announcement of a secondary offering has me deeply concerned about a possible negative impact to my investment.
Not only would the private placement of more than 4M shares be dilutive, it may very well establish a cap to qcom's market price and rob the stock of its positive momentum. I went through a secondary offering with another fine young company, which then dipped and hasn't recovered 2 years later. To my mind, the only justification for the risks of a secondary would be a severe need for cash, and that isn't apparent from Qualcomm's p&l.
Can you help me and the other investors on the Qualcomm discussion
group understand the thinking behind this potentially damaging move?
Thanks in advance for your response,
<Uncle Frank>
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