<Net of all sources and sinks of cash, the company has not managed to accumulate more than 385 M$ in its entire lifetime of operations. >
John, I know it's generally considered good for companies to make profits and accumulate or pay out a big stack of tax-paid cash.
But I've always preferred to take an investment approach. QUALCOMM has got wall to wall top brains with the ability to create wireless mobile cyberspace [terrestrial and space-based].
They could have just milked OmniTRACS and never invented CDMA for mobile phones. That would have given a big stack of tax-paid profits. Yawn!
Irwin Jacobs and the gang have got energy, creativity and all the other characteristics needed to leverage their way through the wireless world. Why on earth would you want them to slow down and dump cash around the place when there is much, much more to do?
Sure, it is NOT a good idea to blow dough on the likes of Vesper, Pegaso, NetZero, infrastructure or Globalstar. But that's life in the fast lane. It's pretty tough to get everything right.
The portfolio of patents which has come out of the R&D budgets which have gobbled a LOT of that free cash flow stuff is worth heaps and has positioned QUALCOMM across the wireless world. Even if not patented, there are plenty of developments which make things work better.
Since the CDMA world has barely got started, using money in the bank as a guide to the future is limited in value.
110 million subscribers out of 6,000 million people isn't a lot. There are almost no BREW users. 3G services are just starting. Globalstar is still in the starting gates. There is a long list of developments and investments which are burgeoning.
Previous business practise is probably a good guide to future behaviour. Irwin Jacobs and co have established a very, very solid record over many decades. Harvey White, Andrew Viterbi, engineer and other founders and creators of the business have left, but that is not the end of the road. The corporate culture is fairly well established.
Maybe we can't see the future, but we are on the way there regardless, so we have to predict the future as best we can. If we go for no risk, we get no returns. An investor's job is to predict the future and create it. Looking for P:E of 10 in an industry with vast growth and profit prospects is like looking for gold nuggets lying around waiting to be picked up. Investors need to be smarter than that. Any fool can make money on P:E ratios of 10 when Uncle Al has cut interest rates to 40 year lows [which of course means they are going up again soon].
Mqurice |
