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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Thomas Mercer-Hursh who wrote (51184)5/1/2002 1:10:57 PM
From: Jacob Snyder  Read Replies (1) of 54805
 
re QCOM:

<<the certainty of getting essentially no return on totally safe instruments>>

Question: Why does a company carry cash on their balance sheet? What is the essential and important quality of cash, that makes us look at it, every time their 10Q comes out?

Answer: The essential quality of cash is its safety, the fact that it holds its value, under all conceivable futures. Cash never gives much return on investment, and any return a company gets is incidental, a trivial part of their overall business. Getting essentially no return (on cash) is OK. Giving up the safety of cash, is not OK.

Seeing a company do this, makes me realize I can't trust the phrase "cash and equivalents". I have to look for myself, to see whether it really is an "equivalent". In QCOM's case, it isn't. But I shouldn't have to do this. I should be able to trust management to do this (understand what is really a "cash equivalent". In QCOM's case, I can't.
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