The equity stakes in licensees seems to be an incredibally small isssue. The size of the stakes are tiny and how else should they account for them?
the thing is not the size, but rather that recording "non-cash consideration" as revenue could give the appearance that it is cash. AMZN famously announced all kinds of deals for many millions of dollars, without pointing out at the time that the deals were for equity. this is now the basis of an AMZN investigation (suit?), where AMZN is maintaining that an announcement of a dollar figure does not mean it is cash. so when people look at QCOM's revenue figures, they want to know that it is hard cash QCOM is receiving.
at the least i would like QCOM to be very up front about non-cash "revenues". for example, they might break out their revenues both with and without the non-cash consideration.
I should add that I dont understand the comment on receivables
if QCOM ships product or grants a license at a fee, invoicing the customer, then that invoice or receivable is basically an IOU of sorts sitting on QCOM's balance sheet. analysts don't like receivables at a company to bloat because it looks like the company is having a hard time collecting its bills. if a customer can't pay QCOM cash, but issues equity instead, QCOM can erase that IOU and (i guess) record the "payment" as part of revenue. of course one problem with non-cash consideration is you don't know how fungible it is, or how much (if anything) it'll be worth when it is "liquidated".
they also added the stuff on nepotism
i don't like to see nepotism at public companies, either.
as for your question of what do i think of these issues...these aren't issues i've raised, and i come up with my personal buy-in target for QCOM based on a more charitable assessment of the company. while the issues do not seem to be favorable to QCOM, they seem pretty small in size, and the current "Enron" environment could very well be contributing to some panic selling. i wouldn't be surprised at all to see some friendly analysts come out "in defense" of the stock. i expect to see these kind of quotes from briefing posted here next week. if that happens, i could see the stock easily rallying above 40 short term. of course, maybe there is something else there that leaves the analysts tongue-tied...nowadays just seems one of those panicky environments where people sell first and ask questions later.
all JMHO and probably wrong! |
