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

To: Jon Koplik who wrote (112071)	2/3/2002 10:47:56 AM
From: kech	Respond to of 152472

Good point Jon- But don't you mean that it is the GAAP earnings that are very low because of the reported write-offs? My understanding is that the Pro Forma earnings count these as one time charges and thus are more useful because they eliminate these charges if one is primarily interested in ongoing earnings power of the company. The phenomenon you mention though would make one very suspect of the analysts that come on CNBC and say P/e multiples are way too high, because these pronouncements are presumably based on GAAP earnings for an index rather than individual companies and their pro forma earnings. Despite problems of pro forma there are also problems, as you suggest, with GAAP. To be more specific, low earnings in GAAP terms include the $64 billion in write-offs of JDSU's acquisitions. This is bound to lower some average p/e's for a variety indexes much more than if the companies stock prices had just fallen with no acquisitions and therfore no write-offs would have occurred.