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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 177.78-2.2%Jan 9 9:30 AM EST
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To: waitwatchwander who wrote (38977)1/27/2004 6:47:58 PM
From: Art Bechhoefer  Read Replies (2) of 197157
 
>>isn't the impact of no debt already reflected in an EPS that excludes debt costs<<

Actually, the debt service costs are only a MINOR part of the impact of debt. The really important part of debt is that it leverages earnings, such that in a period of poor earnings, the impact of debt service becomes ever greater, and the ability of the company to draw on the credit markets is reduced. A leveraged stock (i.e., with a lot of debt hanging over it) creates greater risks for shareholders than an unleveraged stock.

Art
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