Jim, when I say “nonetheless I have to admit that QCOM’s overall performance has been impressive”, I am more impressed with the company's long term vision, QCOM’s march towards positioning CDMA as a global standard, and the company’s ability to rapidly grow the top line, as opposed to the company’s past profitability relative to current share price. While shareholders equity is reported at 5.4 billion with a $6.93 per share book value, a whopping 91% of that, or 4.9 billion dollars, is explained by additional paid in capital. That leaves only 500 million of shareholders equity generated by QCOM over the life of the business, or an adjusted book value per share of 64 cents per share. Paying $40 per share for a company that has only been able to generate 64 cents a share in shareholders equity over and above what shareholders have put into it during the ten years of its publicly traded existence, would in all normal conditions be considered an extremely speculative investment. Nevertheless, I will seriously take John Koplik’s comment into consideration that the market value of the patent portfolio is not reflected in the balance sheet, and if it were, both normal shareholders equity and my adjusted shareholders equity would be much higher.
Best, Huey |
