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

To: Maurice Winn who wrote (113990)	2/22/2002 8:40:32 AM
From: Keith Feral	Read Replies (3) \| Respond to of 152472

No, Mq, this guy JS is talking out of complete ignorance. the company has $2.4 billion in cash and marketable securities. They also have $2.0 billion in investable assets in QSI. They also have $1.0 billion in fixes assets & 0.9 billion in inventory. That is a total of $6.3 billion in total assets. I think he is getting the $385 million mixed up with Sprint PCS.

To: Maurice Winn who wrote (113990)	2/22/2002 2:55:38 PM
From: Stock Farmer	Read Replies (3) \| Respond to of 152472

Mq, Indeed on many of these things I agree with you. Namely that it is better to invest cash for growth than leave it lying around or paying it out. And that consequently the future for wireless gadgets looks bright. But I also agree with you that any moron can make a bundle of money when PEs go to 10, and then voice the corollary that it takes a genius to make money when PEs climb above 30. Relatively speaking. And herein lies a germ of truth. As more and more companies emerge with PEs of 10, morons and geniuses alike are flocking to those lower hanging fruit. Leaving companies with PEs higher than 30 to languish in a situation of oversupply relative to demand (which is also shrinking in aggregate). To which they respond quite naturally by having Adam Smith's invisible hand lower their PEs. Where we disagree. First, that R&D is soaking up all that free cash flow. A small point. A technicality really. R&D expenses are already been subtracted from the top line before we get to the bottom line. Nope, the money-sump is somewhere else. It has to do with buying all of these customers so that there will some day be a bigger market. Purchasing revenue with earnings, so to speak. A trend that had better stop some day. Second, and most important. While you may disagree with using money in the bank as a guide to the future (and I would agree with you in this... generally speaking), at the moment the market prefers otherwise. For right now, for better or for worse, the market is using the past accumulation of shareholder wealth as a guide to the future accumulation of shareholder wealth. Which, sadly, is not something the company has not been good at. Some of the more protective fans will be all over me with invective because they look at 6 dot something in shareholder equity as proof that I am completely ignorant. And then put me and others like me on ignore. Which is an amusing dichotomy to say the least and more of a reflection of them than of me. For I am merely the messenger. Not the message. And I am trying to articulate what I think the market sees. So the message. Unseen and hidden, even though the truth is plain for anyone to see who can open Qualcomm's latest 10-Q and turn to Part 1, Item 1, Table 1: the balance sheet. Wherein we see that of the 6.33 Billions in total assets that 1.12 is already spoken for in total liabilities. Which seems to have been ignored by those who are over zealous ignoring things. That leaves us with 5.21 Billions of accumulated things that we can slice up 767 Million (and growing) ways if push comes to shove. But of that 5.21 Billions, you (shareholders) coughed up 4.86 Billions that would still have been yours even if you (plural) hadn't invested in QCOM at all. This number is provided by the company to the SEC. I'm not making it up. Hardly fair to credit the company with wealth creation by counting wealth that existed all along. In its more than ten year existence, Qualcomm has generated (net of all sources and sinks) a total of 5.21 minus 4.86 or 0.35 B$ for you (shareholders). Stop cheering for a moment. Just a second. Pretend to view the company the way a majority of the other 5,999,999,927 people on the planet who don't post to this thread (and might also invest) might also view it. In complete ignorance of the meaning of the letters C and D and M and A in combination. 'Cause you and me and the folks on this thread, well for all our wisdom, our opinions mean Jack when it comes to the price of a slice in ten days time. So instead of thinking like ourselves and outsmarting the crowd, we could be thinking of thinking like the crowd. And we might compare that total $0.46/share to the many pro-forma dollars per share that this thread has counted as flowing in... quarter after quarter after quarter... And ask ourselves "where has all the money gone"? Because skepticism is in vogue these days. In the next second, we might ponder that 350 M$ economic wealth creation for all shareholders in relationship to, for example, the wealth that Qualcomm has transferred to Dr. J. Who seems to be able to afford the occasional 100 M$ donation. Because the planet is re-discovering that wealth creation and wealth transfer are two different things. And having found themselves on the wrong end of the transfer part, they have an urgent need for the creation part. And then we might think back. And note that despite the profound impact that wireless has had in the last ten years, Qualcomm seems to have only monetized about 350 M$ of this impact. Which is not a trivial sum. But only a percent of what it must do from here forwards in order to deserve its current price per share. With zero percent return on investment. And maybe with this less optimistic perspective we would think that perhaps if we are looking for a return on investment we would want to pay less per share. Somewhat depressing demand. And the law of supply and demand takes over from there. There was a time when hopes and dreams were enough to fund promise. And shareholders were willing to pay considerable sums to be part of the future. And in that time it was silly not to flock like the rest of the pack and ride the hype of hopes and dreams to ever higher stock prices. But that was then. And this is now. Nowadays there is an ever increasing focus in shorter term returns. And so when glancing at a company like Qualcomm with a "show me the money" attitude, they see only what I am articulating. And are wary. We can ignore this mass of opinion, and label it as immature and uninformed and swim against the tide. But while that might make us feel smarter, there is a price to be paid for such "wisdom". Me I am but a drop of water amongst six billion other drops of water in the river. I was taught that one survives in a raging river by swimming with the current and eventually fetching up on shore. One drowns, exhausted, trying to swim the other way. A good metaphor for todays market, IMHO. And so I view shareholder opinion as the current in which I must swim to invest. So I have no position in QCOM at the moment. Not because I don't think it is a good company. But because I think the market is going to give me the opportunity to buy more shares for the same amount of money, on the way up. Hopes and dreams notwithstanding. 'Cause I do think the future of wireless is bright.