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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 164.53-0.4%Jan 14 3:59 PM EST
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To: Ramsey Su who wrote (11193)5/31/2001 4:40:30 PM
From: Art Bechhoefer  Read Replies (2) of 197214
 
Ramsey, you're right that AWE has tons of cash, even if it is from debt issues. But there comes a reckoning eventually. As debt service costs increase and profit margins decline (because of inability to provide competitive performance at competitive prices), it will dawn on analysts and portfolio managers that this company promises a very meagre return on investment. At that point, AWE may find itself in the same bind as Lucent does now: Too much debt and not enough cash flow to stay on the cutting edge of competition. The underlying problem continues to be a corporate culture that is still too dependent on old fashioned regulatory policy (cost plus reasonable rate of return) and nowhere near as entrepreneurial as, for example, the AirTouch management, now a part of Vodafone.

Art
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