Your point is that they have only managed to accrue 1.4B in 11 years, when the page you are showing lists at least 3.9B in current assets. I won't argue the cash and cash equivalents, but are the other assets part of shareholder equity? You can't just evaporate 2.7B.
I didn't read it that way.
Yes, Qualcomm managed to accrue 5.4 B$ worth of shareholder equity despite having booked only 0.6 B$ worth of profits net of expenses. And yes, they have 3.9 B$ worth of current assets. These statements are simultaneously true.
How? It goes like this:
Create 600 M$ worth of retained earnings
Add 4,900 M$ worth of equity financing
Spend 100 M$ in a variety of unrelated activities
Equals 5,400 M$ worth of shareholder equity
This balances quite nicely.
Have 3,900 M$ current assets
And 2,600 M$ other assets
But owe 700 M$ current liabilities
And owe 400 M$ other liabilities
Equals 5,400 M$ Assets net of Liabilities
Nothing missing, nothing evaporated.
Huey is making a reasonable point in response to a common error, that of assuming big piles of cash comes from a profitable business. In actual fact, the reason Qualcomm is sitting on such a big pile of cash and securities has more to do with equity financing (e.g. stock options) than past profitability of the business.
It is quite possible to take an entirely unprofitable business and build up mounds of cash this way. Take a look at SEBL for example. Or a reasonably profitable company and make it look obscenely profitable. Take a look at CSCO, for example.
The rest of the silly-buggers semantics about Qualcomm's intangible assets not showing up on the balance sheet is laugable. They show up under market cap. Where they belong. As the difference between what the company has already earned for its shareholders and what they expect it to earn. The point being that if these intangible assets are properly valued, then this is what shareholders will get from them.
Same as every other company on the planet.
Some companies actually do manage to turn incredible intangible assets into tangible assets on something like a reliable basis. Like Microsoft, for example.
Others go about claiming huge piles of intangible assets, which evaporate like a puff of air when scrutinized. Like Enron.
We get to try and figure out which is which. And without the benefit of hindsight.
John |
