Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.30

-2.6%

3:37 PM EST

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To: waitwatchwander who wrote (129453)	6/1/2003 9:25:37 PM
From: Stock Farmer	Read Replies (2) of 152472

LOL... Assuming ubiquitous irrationality in the marketplace will get you killed in the long run. Just because NASD is down by 80% from its top and QCOM is down 70% from a spot about 20% below its top... well, that's meaningless. Comparing a price to "Earnings" ratio between two companies, one of which generates the kind of earnings that they can pay out as dividends to shareholders, and the other which relies on shareholders subsidizing wages of its employees, after conveniently ignoring the cost of its strategic blunders division... well, that's kind of like comparing the Iraqi Republican Guard units to the US Special Forces by choosing to count fingers and toes. The cool part is it's absolutely correct and you can criticize anyone who disagrees. Just be careful what conclusions you draw from the comparison. An investment decision is both relative and absolute. It will be measured "good" versus "bad" by two metrics. The first is the difference between the price at purchase and sale. The second is the elapsed time. The third is the foregone difference in alternatives over the same time. Every decision to hold or buy is a forward looking one. Valid on its face from a forwards looking perspective only. Very silly to say "Qualcomm is a good investment" because it was purchased six years ago at a low price and held tightly through the roller-coaster we have seen. More appropriate to say "Qualcomm was a good investment" and then go forwards from here. Because the truth is that Qualcomm has, on average, been declining as a "good" investment over the last three years when measured from a starting point more than three years ago. And there is a very strong possibility that this trend will continue. I am merely looking at what it will take for the company to generate decent returns from a buy price in the low $30's. I am comparing that to Qualcomm's current results. And the gap is large. When I attempt to construct scenarios which deliver the kinds of returns I am looking for, either the time span is uncomfortably long or my risk premium for a healthy return is uncomfortably low. So I label QCOM (not Qualcomm) as a less than attractive investment compared to alternatives available to me at the moment. I get better risk-weighted returns on other investments. That doesn't mean I don't like Qualcomm. Or that I should ignore it. So I continue to follow the issue. Hopefully it will one day come into buy range, and indeed I do think that it will. Until then... best of luck. Regards, John

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