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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 163.65

+2.5%

1:44 PM EST

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To: JMD who wrote (35586)	7/19/1999 2:30:00 PM
From: Nancy Haft	Read Replies (2) of 152472

OT dd on management O Grand Poobah, thanks for sharing your ideas about researching management, a somewhat underappreciated but most excellent means of evaluating an investment. Here's a war story: Once many years ago I was reading one of those tiny little booklets that companies send you every quarter, you know, the ones printed on really thin paper with type a size I couldn't even read in my twenties. Way way in the back pages of said book were a couple paragraphs about a beach house in North Carolina that the company bought and maintained for the use of top management and their families. Hmmm. Following that were a couple paragraphs about a sale/leaseback agreement for company HQ buildings. OK, that's fine and dandy. But then the rent schedule was front loaded to an alarming degree and furthermore the sale of the real estate was to a company owned by a different family member. Can you say transfer of assets? Hmmmm. Then there were a few paragraphs about how they paid "rent" for the art collection that hung on corporate HQ walls. And of course further reading revealed that the company already owns the art collection. They are paying themselves "rent" on their own art collection. Double hmmmm. A few months later, surprise, surprise, it is discovered that there are accounting irregularities in the books and the stock tanks 65% overnight. I should have sold my shares after reading the quarterly report. It was all there on those pages. But I didn't. I was young and foolish and didn't understand that it is people who manage a business. A good lesson about character and management. Oh yeah, in my view this is the only dark cloud of any significance over Loral. Bernie Schwartz is getting a bit old and the question of succession is not proven. Thanks again, Mike. Nancy

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