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

To: Maurice Winn who wrote (112758)	2/9/2002 12:14:22 AM
From: Neeka	Read Replies (1) \| Respond to of 152472

Oh but that your's was truth. M

To: Maurice Winn who wrote (112758)	2/9/2002 8:35:27 AM
From: Moominoid	Read Replies (1) \| Respond to of 152472

Yes, earnings are misleading from the investors perspective because R and D is really investment but it is deducted before tax and investment is deducted after tax from profits. But the real relevant measure for investors is free cash flow (see Miller and Modigliani , 1961). The amount of cash generated after deducting all investments whether they occur before or after tax. It is this discounted free cash flow which is the theoretical value of stocks in the text-books and what an acquirer should pay with adjustment for taxation considerations of a merger.