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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 173.69+1.3%3:35 PM EST
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To: slacker711 who wrote (112555)2/10/2002 4:05:04 PM
From: Wyätt Gwyön  Read Replies (1) of 152472
 
if Qualcomm trades below $30 or so, it should start to buy back shares. It would be the best use of cash that they could have....

if they bought back $1BILLION worth of shares at 39, it would be pretty ironic--that is about the price they sold all those shares to the index funds in 1999 when they joined the S&P500. so if they were to announce a buyback at the current price level, it would look pretty pathetic to me.

of course, if you want to talk about smart things to do, they should have done a shelf offering and sold $10BILLION of stock when the stock was around 150. then they could buy it back under 40 at 75% off, and pocket $7.5BILLION profit, which is much more money than they have ever kept from their business.

as to buying the stock below 30 being the best thing they could do with their money...that would seem to imply that the best thing anybody could do with their cash is to buy QCOM under 30. from a long-term perspective i would tend to disagree, although it could be an excellent trading buy. (but i do not think a company that has no burning need for cash but sells $1BILLION of equity a few months before its stock quintuples is necessarily the most skillful spotter of trades.)

i do think they could expect a long-term return of 3% annualized if the stock falls below 30, but that doesn't seem too attractive compared to bonds. of course, one could expect a higher return under more aggressive growth assumptions.
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