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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (53957)	5/3/2003 6:31:54 PM
From: Stock Farmer	Read Replies (1) of 54805

Mike, Qualcomm cash flow from operations 0.5 M$ this past quarter? Maybe we look a bit closer. 1.0 B$ in revenues in the quarter 0.65 B$ in very real expenses (cost of goods, R&D, G&A), not including any income tax obligation. So 0.35 B$ worth of pre-tax revenue-minus-real-costs is supposed to be generating real cash flow of 0.5 B$? Not likely. Not likely at all. When I compute free cash flow for six months I get 0.462 B$ (income + D&A and noncash charges - capex). Cross checking with the balance sheet we see shareholder equity net of paid in capital increased 0.371 B$ in six months. Which two metrics of 'value increase' are within 20% of each other, and close to the 0.5 B$ you are talking about. But since last quarter wasn't a loss, neither are anywhere near supportive of 0.5 B$ free cash flow this last quarter. Could it be you've mistaken a six month free cash flow for a 3 month free cash flow? Note that would strengthen your argument (QCOM not deserving a higher price than it currently commands) by about a factor of 2x. John

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