Keith, yes you are right. Retained earnings do matter on some level. And yes, we can't just randomly apply numbers.
And at the same time, I'm not "randomly" applying retained earnings to Qualcomm's current cash position either.
Indeed I am fully acknowledging that Qualcomm has 5.1 Billions worth of assets.
What I am pointing out is that it's not unreasonable to expect them to have more than 4.8 Billions, given that shareholders gave them that much to begin with.
And then I merely point out that in the case of Qualcomm, the answer to "how much more" is 384 M$ over the life of the business, and that's assuming we like to value Goodwill etc. at a hundred pennies on the dollar.
So all this means is that the company really isn't earning a lot for shareholders. Despite those reports of dollars per share flooding in, those dollars seem to be flooding right back out again. And the assets the company has are of lower quality (55% solid, 35% liquid and 10% vapor) compared to the cold hard cash that they started out as. If we value the "liquid" component at twenty cents on the dollar then we're looking at an actual negative wealth creation.
If this is a trend, and if such a trend continues, well then it really doesn't matter whether every mammal on the planet is implanted with Qualcomm technology from birth.
This isn't a factor limited to Qualcomm. It's endemic to the tech sector at the moment. It has to do with how tech companies are managed and run. And how insiders are compensated and how earnings are accounted. Versus how economic wealth is being created for shareholders.
Which creation of wealth is not to be confused with tricking someone into spending $100 on something worth $50 by showing that it's worth $200 dollars (pro-forma).
And it's got to change in order for tech stocks to deserve their price. Either that or the price will change. Or they will retain their price, and instead we will buy and sell and value our portfolios in pro-forma dollars.
Which might be kind of what they would be worth, if only the future we want unfolds exactly as we predict <ggg>
Sadly, I happen to think that reality has a habit of intruding in the most rude and unfortunate way.
I do hope you don't take my posts to this thread as a personal attack and in the spirit that they are offered. Merely my humble opinion trying to make sense of why things are unfolding as they are.
John |
