SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 155.82-1.3%Jan 23 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: brian h who wrote (8157)2/7/1998 8:54:00 PM
From: Matt Webster  Read Replies (1) of 152472
 
Pricing in Surprises...

The author below makes the questionable and interesting claim that the analysis does not contain the possibility of a surprise license by ERICY or other events that could increase the price dramatically. The counteragument to that argument is obvious. The probability of that happening arguably has not changed since yesterday's announcement about South Korea.

If one believes in anything like efficient markets, one would have to believe that the prior price included the possibility of those "surprise" events. For the author to make his argument, he has to mean that the lower stock price and increased SEA fears increase the probability of the other events. Now, THAT is an interesting argument.

I personally can see the logic to it if this makes QCOM willing to lower the price of a license to ERICY. If that is the case, the license deal is more likely. However, on the other hand, the lower than expected price reduces the value to future earnings, and that, too, has to be discounted.

Theoretically, this is a question of the correlation of shocks. Step one, is the shock of SEA going into the tank positively or negatively correlated with ERICY's signing a deal? Step two, is the correlation economically meaningful. The answers to those are completely up in the air. I personally would like to hear commentary on that from all concerned.

Matt
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News