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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 166.28+1.8%11:26 AM EST
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To: Wyätt Gwyön who wrote (119205)5/22/2002 5:47:03 PM
From: David E. Taylor  Read Replies (2) of 152472
 
Mucho:

Grocery stores? With due respect to your usually valid points, I think you're comparing apples and oranges with ASCIC's here (<g>).

Now if IJ had raked in $8 billion or so over the years from a fruit stand outside of Qualcomm HQ that had nothing to do with the company's R&D, you'd have a point. But apart from the revenues generated from purchased technology (Snaptrack etc), whatever revenues Qualcomm has generated have come from the fruits of its own R&D efforts - and you could even argue that the purchased technology was bought with cash earned from products generated by internal R&D.

While they may have wasted some of that R&D expenditure on dead end products, overall they've generated about $8 of revenues (whether profitable or not) for each $1 sunk into R&D. That's being conservative IMO, since almost $1 billion of that $2.3 billion (total spent since 1992 on R&D) has been spent in the last 30 months, and we're only just beginning to see the revenues from the new 1x products flowing from that portion of the overall R&D spending.

So you could even argue that the $18.4 billion of revenues to date has been derived mostly from the products of around $1.3 billion worth of R&D, and at the same ratio, we could maybe expect $14+ billion of revenues over the next 3 years or so from the most recent 30 months worth of R&D investment on MSM 5xxx and MSM 6xxx product designs.

I'm not saying anyhting here about how much of that will get to the bottom line, since that depends on a host of other factors. Neither am I saying that they should have "carte blanche" to spend whatever they like on R&D, since at some point the incremental spending will not generate an appropriate return - and the current rate is higher than its ever been at around $450 million for this FY if they keep up the pace of the first two Q's. But they are working on getting a ton of new MSM 6xxx designs out the door which will hopefully be generating revenues for the rest of this decade.

JM2cW.

David T.
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