Whatever the formula for Assets, Liabilites, and Shareholder's Equity, you still get a net present value of zero. There is no correlation between Qualcomm's cash and marketable & the $350 million value that John is attempting to use.
So you'd pay $50 for something that has a net present value of zero?
Please wait while I go find some Enron shares to sell you.
You and I both know you don't mean this.
You know and I know that we as shareholders have claim to the equity of the company. Which is what we can carve up 767 million ways. Which is what we would pay something between $20 and $200 a slice to own.
This equity is the difference between what assets the company has, and what liabilities it has to everyone else except us.
What I am measuring is the degree to which the company has generated shareholder equity. 'Cause that's what matters to shareholders. Or it should anyway. Unless the only purpose is to flip the stock to someone else for a profit, in which case we only need a large supply of wealthy and clueless people and some nice sound-bite one-liner promises of untold wealth into the future.
Which works for some of the folks, some of the time as Barnum said.
But me, if I'm going to pay $50 for a slice of something that is currently obviously only worth $5, I want to have at least some hope that the other $45 is coming from somewhere other than my pocket. Alternatively we have Enron or Globalstar or whatever.
Which leaves me looking at what the company's equity used to be, and what it is now, and how this has changed over time. And most importantly, where the change in equity has come from.
And I'm not alone in my curiosity. Enough of us have the same point of view that the SEC mandates disclosure to help us out.
There are three sources of changes to shareholder equity: from *actual* results of operations, from *hypothetical* mark-to-market gains or losses and other incidental happenings, and from *shareholders* through equity financing.
These numbers matter Keith. For they measure the financial performance of the company. That 0.3 B$ that I am talking about is the sum of the first two categories for the company Qualcomm.
You may not understand how this is derived, and a d bar in accounting is enough explanation for me. But not understanding something does not make it untrue. It just makes it misunderstood. |
