Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 164.97

-0.7%

11:44 AM EST

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To: Stock Farmer who wrote (118951)	5/19/2002 1:55:55 AM
From: Maurice Winn	Read Replies (2) of 152472

John, thanks for the exposition on share options. I find that very interesting. Tax people tend to cut to the chase and flim-flam gets left out, so I'm inclined to accept their position as the financial facts. Research and development is also an expense, which tax people allow to be deducted from income immediately rather than calling it capital expenditure. But I consider R&D to be investment capital. Some of it is wasted because nothing profitable comes of it, so there's a lot of waste and expense in it. But the good stuff is very profitable. So understanding the long term income from QUALCOMM means having to understand the potential of that as well as the costs of stock options strung out in the future. As well as guessing at market demand - which we have seen is all over the map [meaning delayed by 3 years compared with where I thought we'd be in 2002]. Stock options have been super profitable for employees and I consider the stock option pay rate has been excessive. Because so many people share in the profits of the company, I don't think stock options are individually motivating. I like things clean and simple. You do a good job, we'll pay you this much money a year. If you think the company is doing well, then use some of your salary to buy shares. If you have a lot of confidence, use some of your salary to buy options. That would cut down on paperwork while leaving employees to put their investments where they choose. Stock options also create arbitrary winners and losers and court cases [as when the infrastructure employees got sold down the river to the King of Hagfish]. The company management is not able to judge share market price and the market price for stock options is a pig in a poke. I suspect [I have no idea really] that employees look at their cash in hand as a bird in the hand and devalue the stock options as being two birds in the bush. Therefore, I doubt that stock options are an effective way to pay people. Shareholders have to pay two birds instead of one bird in the hand. And we ended up paying a whole flock of birds because of a very volatile share price - while annoying the unlucky losing stock option holders. Mqurice

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