Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 181.27

-0.5%

Dec 11 4:00 PM EST

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To: T L Comiskey who wrote (112052)	2/3/2002 9:32:34 AM
From: Jon Koplik	Read Replies (2) of 152472

Re : comparing reported losses ("pro forma" and "reported to shareholders via headline") -- One thing that I have NEVER seen discussed is the following : Company A and company B are both high-flying, well-liked (in the years 1999 and 2000, anyway) high tech companies. Company A happens to take over company B (in an all stock transaction) some time while the share prices of both companies are quite high (and, the perception is that the high tech business sector is great). Things change. All high tech stock prices fall dramatically, and the high tech business sector is now perceived as bad. My idea / observation / question / query -- it seems to me that : It is ONLY because company A merged with company B that we are forced to hear about these ridiculously large pro-forma earnings losses. If company B had remained independent, it would still have suffered a massive collapse in its share price, but ... as an independent company, would NOT have triggered a huge write-off in earnings. (I am aware that (independent) company B might have done some weird "re-structuring" type announcements, and thus created some massive non-cash (?), incomprehensible to the ordinary person "losses." But ... I still think that the magnitude of NASDAQ 100 companies "pro forma" earnings report losses would have been profoundly lower if not for the mergers that happened to take place ... ) Comments, please ? (And, please feel free to re-post this some other place on SI where there are people that can explain accounting to "mere mortals"). Jon.

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