limtex--As I have noted in several of my earlier comments, one of the key factors that determines how a stock performs is, unfortunately, NOT real or prospective earnings but simply what a handful of so-called investment experts THINK about a stock.
Look not just at QCOM and its competitors but also at stocks like SanDisk and you will see the same phenomenon. It's not how well the company is doing but how well some analysts THINK the company is doing, whether or not they have enough expertise or skill to even understand what the company is doing. Those are the facts of life in today's investment world.
The only advice I can give is based on more than 50 years experience investing, together with the investment record my father accumulated over a period of close to 70 years. You rarely make money following the herd. Here's an example:
In 1949, my father, then 45, had a little time to study possible investments, and after much thought, he decided to make a major investment in Newmont Mining. The shares did little for then next 40 years, appreciating an average of less than 7 percent a year (including the dividend). But in 1987, the Texas based investor T. Boone Pickens Jr. decided he would like to acquire Newmont (at that time the largest gold producer). NEM shares were selling around $40. Newmont management had better ideas than to allow such an unfriendly takeover. They promptly declared a dividend of $33 per share, and of course the stock immediately jumped to about $80, making it not a very interesting deal for Pickens.
Newmont officers generated money to pay that huge dividend by selling forward their entire gold production for the next 10 years at a price of $400 per ounce--a price that was never reached on the spot market during that entire time. So Newmont made money on its own forward sales, and shareholders like my father walked into the bank (about a week after the October stock market crash) with the biggest check he had ever received in his whole life.
The lesson is simple: As an investor, you have to rely on the quality of management to deal with unusual situations--whether it be a takeover attempt, litigation, changes in market demand, whatever. Good management will find a way to deal with the problem--successfully. Bad management, on the other hand, will invariably hurt shareholders under similar circumstances.
QUALCOMM faces a combination of litigation, changes in market demand occasioned by questionable technology and even more questionable, politically oriented decisions of so-called government experts. We hear that QUALCOMM has come up with a settlement offer in regard to BRCM, which some of us think is like selling out to the enemy.
But what do we know? Would a settlement with BRCM destroy any case that Nokia and its gang could muster in their home territory? Would it put an end to challenges on the fairness of QUALCOMM's royalty rates? We just don't know. But we do know that QUALCOMM has probably the best quality management and overall workers of any technology company, period. That's enough for me.
Art |
