It is their money and they can invest it where they feel it will further their interests.
I don't know who exactly you mean by "their money." Presumably since it is in the same sentence as "where they feel" and "their interests" you are referring to the management of Qualcomm?
Probably guys like Ken Lay have the same attitude.
But - you misinterpret if you think I disagree with the investment strategy. You are dead on, both historically and now. What I am trying to point out is that because QCOM has to subsidize the market creation of CDMA (not that others don't with their stuff) this creates quite a perpetual drag on real (read not pro-forma) earnings, and we get the Globalstars, etc. of the world out of it. Unfortunately, there really isn't much of a choice.
But shareholders (whose money, BTW, it really is IMO) need to realize that somewhere north of 50% of the identifiable non-cash assets of Qualcomm are in the Evangelist/Doofus division, not the core operations. I think you pointed that out quite well: If you feel they should maximize the return, perhaps you should consider investing in a Mutual Fund, many have less than 2 billion and could show a better return, but not increase the CDMA market. So, that's the same message I have. Taking it one step further, brother Art apparently think it's just ducky to pay 7 times the net asset value in order to buy into this particular investment. He might turn out to be right. Dunno.
Assuming the notional theory of investment is to get a return, just working through the mechanics of paying some pretty stiff premium over net asset value for the Qualcomm Emerging Carriers fund. Let's look at this animal a bit.
If you read between the lines, you can quickly pick up that one of the drivers of the new segment reporting set-up is the losses from Vesper - which, for the period of time they've been consolidated are clicking away at the rate of $500,000 per day.
Pegaso, which also looks close to death's door, has received loans and investments from QCOM through 9/30/01 of $615 million.
Since you've asked for links, here's one to study:
qualcomm.com
Over $2 billion dollars of a lot of peoples' money. Again, given the alternative (no CDMA) I'm not sure there's any better strategy - but people really need to pay attention to what happens to the cash flows in this place when they are evaluating QCOM as an investment.
Lastly, while I picked at some of Art's numbers, I didn't say any of Qualcomm's were "wrong" - just that the presentation was curious. The jibe about Andersen was in jest, and indicated as such. The reference I made was to TODAY's earnings release - shouldn't need to provide a link, but plead guilty to referring to a "really boring" part that maybe most of y'all skip - the balance sheet. |
