Ramsey, you listed a number of possible uses for the funds; the company has many uses aside from just the capital needed to support growing receivables, which even if paid timely, would be a drain on a company enjoying dramatically increasing sales.
In a pm today, I was told that partners on the street (i.e., not just flunkies) think that Dr. J is going to strike hard and very fast to ramp up. Maybe a merger or buyout.
It's very important that the company move quickly to maintain its technology lead, gain market share while it's well ahead of the competition.
My bet is on Europe, possibly handset jv with Siemens. Siemens has wanted to be in the biz for a long time; even wanted to buy the Q awhile back. From what little I know Siemens has the wherewithall to make an impact in Europe and open doors. I could see a deal where Siemens can sell Qualcomm-designed phones as soon as the production lines are set up, and who knows, maybe under the Siemens label to get immediate entree to the European carriers and consumers.
As far as the Palm Pilot scenario, which has been bandied about, I don't know much about that company but don't think that deal would be done for cash, anyway. But the war chest on the books sure could help in a stock deal. It takes cash to fund the transition after a merger, and presumably there would be lots of new projects, products that could be initiated.
One final thing. I have heard that the handset division is undergoing a philosophical revolution--bring products to market faster--faster product cycles. Takes a lot of money to bring a product to market.
As far as increasing the number of shares in the offering, it's obvious that the demand for shares was so great, the underwriters reported that a larger number of shares could be sold and recommended getting the cash now under favorable terms. Remember, the anticipated cost of the offer is $600,000; doesn't cost any more (other than filing fees, that sort of thing tied to the number of shares) to get an extra 300 million. If the company waited, you never know what the market conditions will be and you have to incur the legal fees, etc. to do another offering. The company wisely jumped at the chance. |
