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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

QCOM 174.46

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1:22 PM EST

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To: Maurice Winn who wrote (93450)	7/22/2010 12:43:00 PM
From: Art Bechhoefer	Read Replies (1) of 196641

Mq:--Paul is paid in stock options and he gets his money from the share price going up. If he pays out the cash now, he will find the share price goes down by the same amount Suppose QCOM pays a one-time extra dividend of $1/share. That means paying out $1.6 billion, which reduces shareholder equity on the balance sheet by 1.6/19.9, or 8%. But the extra dividend would, in fact, INCREASE the stock price, probably by about 8 percent. So PJ loses very little, and he may even gain when the value of his options shoots up on the prospect of receiving the extra dividend. He can sell his options, rather than convert them, and take a capital gain instead of a dividend, which may or may not be too his advantage (not being his tax consultant, I don't know his personal situation). Bottom line is that the company has too much cash in relation to its growth rate, its need for internally generated funds, and its type of business, which uses less bricks and mortar than a business that owns all its own production capacity. Art

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