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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 180.90+2.1%Oct 31 9:30 AM EDT
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To: waverider who wrote (111629)1/25/2002 12:34:22 PM
From: Keith Feral  Read Replies (3) of 152472
 
Waverider: If you are a short term trader, what difference should accounting numbers matter to you? Qualcomm has been taking charges like every other tech company in the world for the past 24 months. Why do insist that Qualcomm's treatment of pro forma EPS is so different than AOL's write-off of $60 billion in goodwill? The government gave everyone the green-light to make aggressive charges in order to compensate for the accounting changes that ended the practice of M& A using pooling of interests. It's all tit for tat.

Now the string of write-offs for Qualcomm are over - Globalstar is in bankruptcy and Vesper loans have been consolidated to the tune of $50 million. It's a shame that companies will no longer be able to use income from investments in their pro forma EPS. As a shareholder, I am horrified that Qualcomm had to report losses for the past 2 years in their pro forma results. Now that the overhang in non performaing assets is gone, Qualcomm is excluded from realizing the future gains from it's investments. It's a tragic decision.

All the criticism for Qualcomm's investments is pure non-sense. They have to make investments in companies deploying CDMA networks in order to grow their technology. Qualcomm is not a savings account for people looking to invest in Treasury bills at 3%. In fact, I was amused that Qualcomm said they would be shifting some of their cash reserves to high yield. At least they can generate some cash flow at 8%.

All the gloom and doom on this thread is driven by absolute statements that Qualcomm is overvalued. On a relaitve basis, it could be argued that Qualcomm is undervalued relative to a lot of other tech companies with forward PE's of 70 to 100. However, the EPS projections from 2002 to 2003 show startling improvements, especially when you accept the fact these companies posted big losses over the past 12 months.

The game is starting over from scratch.
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