" so either they need to execute quickly ..... or we need a new pitchman to wall street"
This is exactly it. This is what I'm talking about. If Apple is indeed manipulating Qualcomm's stock price, this is the desired effect. Pressure on the stock price means pressure on management from a certain type of investor.
I realize that hypothesizing that a company as large as Apple might find it within its commercial interest to manipulate the price of another company is an outrageous claim. First, how could they get away with it? Second, how would it benefit them? Third, doesn't reducing the price of a fairly valued company only make it more fairly valued-- indeed, cheap by conventional metrics?
1. How could Apple get away with it?
This strikes me as the hardest question because strictly speaking, as Art would remind us, manipulating stock prices is illegal. It is illegal for a giant company like Apple who wants to put pressure on the management of its oldest frenemy to manipulate the stock price of the modestly valued supplier of the IP on which Apple has based a golden franchise. But how hard would it be to do? You have billions in the company till; you have some of it offshore; the exchanges are monitored, probably in a cursory fashion, to try to spot such illegal influence; but, it would be easy to buy some Qualcomm slowly over a reasonable period of time and then dump the stock when you want to put pressure on management to agree to your terms for their license. Even the professional stock pickers who work for Vanguard or other big owners of Qualcomm can be rattled by seeing the price drop in the face of excellent earnings and improved projections. We're all human, after all. So, Apple waits for the earnings report, maybe they even buy some shares to drive up the price a week or so earlier, and then when the earnings hit the wire, boom, you dump the stock. Price dives. The guys who make a living playing like they can predict stock prices all come out and explain why they have been predicting this, etc. etc. Qualcomm signs the licensing deal with Apple, presto!, the stock price goes into overdrive. How much did it cost you? The government can't prosecute people who don't pay their taxes. How could they ever catch you?
2. How would it benefit Apple?
Qualcomm management probably suspects that Apple does things like this, having been through this drill before. They know that Apple will do whatever it needs to do to make things better for Apple. So, they know that they can get the stock price to turn around by simply signing the contract Apple wants.
3. What's the crime?
At its very worst, all you can say is that Apple, which has a right to own shares of Qualcomm, thought that they couldn't get enough of the stock from 160 to 162 but when they found out that one of the metrics was slightly off, boom, they dumped it all- driving the price to 145 and causing shareholders to wonder if better management is needed. How big of crime is it to give Qualcomm PE of 14. It's not like they are not paying royalties or something like that. Apple has thought these things through. Why not do it? If it was possible to even make the claim get the legal process going, it would take years. The license will be signed by that time. Apple will be trying to say that they really didn't sign off for full patent peace.
We've seen it all before.
j. |
