Art, i believe the Pegaso numbers are already excluded from QCOM's pro forma figures.
as for better opportunities than Treasurys, well, there should be! if the inflation-protected US sovereign issue is considered a risk free 3.5% real return, then greater-risk instruments (i.e., all stocks) need to have a higher expected return than 3.5% real (or say 5% nominal) in order for there to be an equity risk premium. that is all just elementary.
so when i state that i have a hard time seeing how QCOM will outperform TIPS over the next decade, that means i don't see where there is any equity risk premium...and if there's no premium today, i believe there will probably be one in the future (with attendant implications for market prices). unless you think the earnings stream from QCOM is more reliable than a payout from the US government on its sovereign bonds. (actually, the last statement might not be recognized as rhetorical on this thread -g-.)
Many unexpected factors can interfere with anticipated growth, and QCOM had its share of them in 2000 and 2001
this is why, imho, equities need to be priced cheaply enough that their expected return will equal a historical risk premium over risk-free assets. fyi, the historical risk premium is about 4.5%. add that to 3.5% risk-free return from TIPS equals a required 8% real expected return, or 10% nominal. i would like to know what you (or others) think the current risk premium embedded in QCOM is, and how you derive that figure. |
