Northforce - QCOM sold the division that incurred heavy losses of $250 million per quarter (Infrastructure) and 'spun off' liability for vendor financing and poorly (yes, piss poorly) contracted deals in third (and fourth) world countries via an entity known as LEAP Wireless creating a $2.5 Billion bankruptcy. The other money pit, the handset division, was pawned off on Kyocera for a tidy sum. And mgt recently screamed uncle on GSTRF and wrote off $686 million, but not before using Globalstar to bury hundreds of millions of CDMA R&D expense. Very shrewd business.
These actions helped create a near monopoly in a NEW wireless technology product market. Going from zero subscribers to 100,000 or millions in a few years would make anyone's balance sheet shine. However, once the honeymoon wears off, it will be much more difficult to show explosive growth rates and unplowed virgin pastures over the horizon. But, the stock might still be priced in anticipation of miracles that will pass more like kidney stones. QCOM is a technology company, not a traditional, block and tackle, global business (like ERICY or NOK). It will be exceedingly difficult for QCOM to realize their vision in the timeframes necessary to materially impact the stock (in positive direction). TIMING and MAGNITUDE of cash flows may vary.
Aside from lacking traditional business mgt expertise and corporate experience, investor expectations are still at nosebleed levels--most will continue to sell stock as the company can't meet the impossible $1,000 per share criteria. And yes, as several continue to point out, the $1,000 per share price was called before the 4 for 1 split (again proving how splitting shares has a misleading psychological effect--it often creates perceptions of value where none REALLY exist!).
Maybe they'll start doing reverse splits and we can get back to the original price in '98? - g/ng - |
