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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: JGoren who wrote (110155)	1/3/2002 2:16:46 PM
From: Wyätt Gwyön	Respond to of 152472

qcom has not reached the status where it cannot use its cash profitably to generate growth in cdma and internal growth. paying dividends is not synonymous with ceasing to grow. look at the pharamceutical cos, which have paid respectable dividends while growing over the years. the key is to have a balance. paying dividends breeds fiscal discipline in management so that they don't chase after so many boondoggles. think of all the money qcom has wasted on stupid schemes -- those funds would have been better spent as dividends. qcom is in the fortunate position of not having huge capex requirements for their own operations, and the CDMA ball is certainly rolling. they could start paying a dividend now and still have plenty of dough to grow their business (paying a dividend doesn't mean you can't keep growing). imo the real problem with paying dividends is that tech companies don't like to lose their ridiculous multiples. multiple contraction tends to happen when you pay a divided (as more rational investors and fewer bubbleonians flock to your stock). on the bright side, it's not bad to have a rational set of investors in the long run. S&P500 companies that paid a dividend in 2001 were flat for the year on average (owners actually made money when you include the dividend), whereas non-dividend-paying companies had a down year in stock price.

To: JGoren who wrote (110155)	1/3/2002 5:45:14 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 152472

Re: Dividends have good and bad aspects. When Intel began paying a small dividend, hundreds of pension funds whose rules prohibit investing in stocks that don't pay dividends began buying Intel, and the stock was one of the better performers. On the minus side, dividends are taxed twice, the first time as part of company profits and the second time as income to the individual investor. As long as the tax code allows this double taxation, it seems to me that dividends beyond a modest level are counterproductive. Instead, if a company really has enough cash to pay dividends, it also has enough cash to buy its shares, thereby increasing the earnings per share and potential gains subject to the capital gain preference. I would prefer this alternative or at least the Intel approach. Art