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

To: Keith Feral who wrote (113994)	2/22/2002 11:07:55 AM
From: biostruggle	Read Replies (1) \| Respond to of 152472

QSI That 2 billion in investments is suspect. Pegaso and Vespar alone are what I would call impaired investments. Hopefully, with Pegaso, the Spainish Telecom will ride to the rescue. Not yet though.

To: Keith Feral who wrote (113994)	2/22/2002 3:09:41 PM
From: Stock Farmer	Read Replies (3) \| Respond to of 152472

Complete ignorance? Hardly 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. The company has 6.3 Billion in assets. Very observant. But in your sums, did you forget about the 1.2 billion in liabilities? Or do you suggest we just ignore those? Leaves 5.1 Billion for the pickings if we aren't to be ignorant. Did you forget about the 4.8 Billion contribution by shareholders? Or do you recommend we remain completely ignorant of this as well? Leaves 0.3 Billion in wealth creation. And peeking into the assets we see 0.5 Billion in "goodwill" right off the top. Which does not appear obvious anywhere in your sums. A mistake, or more ignorance? Or purposeful obfuscation? It seems that a very objective look at the facts shows that in its entire life, the company has managed to convert 4.8 Billions in shareholder cash into 4.6 Billions of stuff and 0.5 Billions of blue-sky hopes and dreams goodwill. Which it also seems is something that QCOM investors had, and still have, in abundance. So those of us who aren't ignoring the details of the balance sheet are left wondering what wealth the company has actually created for shareholders. Not in one of many possible alternate futures, not in the last week or so, but over its entire life. And just because these 4.6 Billions might be invested somewhere by the company for a profit-to-come-any-day-now is hardly a claim. Shareholders could have taken their own 4.8 Billions and invested directly in the same stuff that QSI holds. Or perhaps more safely in a mattress, given the past track record. Or flooded the USPTO with 4.8 Billions worth of patents. Or some combination of above. And while we are speaking of opportunity cost, 4.8 Billions invested in 10-year T-bills for the last three years would have generated 0.0 Billions in hopes and dreams and 0.9 Billions in cash. Which is superior (in some people's eyes) to 0.5 Billions in hopes and dreams and negative 0.2 Billions in cash. These are facts. Whether you like them or not. And they remain on the table, whether you choose to ignore them or not. I am not saying that the future of CDMA is dim or bright. Nor am I conjecturing about whether it will win or lose in the marketplace. And I am not claiming that the wealth of a treasure trove of patents is or is not worth billions. These are all positions of ignorance to one degree or another, given that we really can not see very far into the future. I am merely observing that the theory of untold riches just over the horizon has been with us for at least three years now without any measurable results. Except that the horizon remains in front of us like a carrot on a stick. In other words, I'm observing that the company has zero dot zip in the way of track record of actual wealth creation behind it and only blue-sky hopes and dreams in front of it. Which has been characteristic of the company for some time now. And which was fine when the market was paying for blue sky. Perfect, indeed. But now it seems that the market is paying for results. And sadly Qualcomm doesn't have enough to show. Where the term "enough" is measured on the only ruler that matters: against the market, by the market. Sure, the results may be in the future. They darn well better be, or shares are suddenly worth south of $5. But if we want to know why the share price is doing what it is doing and project where it might go, all we have to do is open our eyes and note that hopers and dreamers with both the inclination and cash to place bets on more hopes and dreams are amongst a growing minority in the marketplace. The law of supply and demand takes over from there. Me, I'm a hoper and a dreamer too. I'm not short QCOM or betting against it like others. But I'm not long either. And I'm not here mocking folks who have lost piles of money. Or here reminiscing about how wonderful our investments have done in years gone by and pining for these lost days. I am just here to engage in objective commentary on what is happening to an icon of the tech genre. Trying not to get caught up in the depression of doom and gloom, and also trying not to have my hard-won wealth vacuumed out of my portfolio by remaining obliviously optimistic. And so I have taken what I believe to be an objective view of the market. And tried to explain why I hold it so that when I am incorrect that others might help me see things differently. And perhaps do the same service to others if the shoe belongs on the other foot. Quid pro quo. Feel free to shoot the messenger. Mistake me for the message. Rant and rave against the economic pain that the market must be doing to your portfolio. These I understand, because it's tough to see the market turn against what we believe. Been there. Have the scars. But in all of this, it is hardly appropriate of you (of all people) to slander others with the word "ignorance". Particularly not when the market has been rather relentless in validating a point of view that you do not seem to share nor seem to want to acknowledge.

To: Keith Feral who wrote (113994)	2/22/2002 4:34:52 PM
From: David E. Taylor	Read Replies (1) \| Respond to of 152472

Keith: Regarding JS's statement that: ....the company has not managed to accumulate more than 385 M$ in its entire lifetime of operations... to which you responded: ...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. I think, no I'm sure, that JS is correct and that you have this wrong. The latest 10Q filed by the company does indeed show "retained earnings" at $384 million, and if you dredge through all the company's SEC filings, you will find that the $384 million number is in fact the sum of all of the net after tax earnings and losses over the public life of the company. That number stood at an all time high of $871 million on 9/30/00, and it was reduced to the present level largely by the $549 million loss in FY 2001, courtesy Globalstar and other "one-time" events. Those $384 million in retained earnings are what is left (after taxes) of the $17 billion in total revenues earned by the company between 1992 and the present. For those who want to count the cash sunk into R&D, i.e. the cost of generating all that valuable IPR, the cumulative R&D expense stands at just over $2 billion ($2,066,433,000 to be exact). The other big numbers you note in cash, marketable securities, QSI assets, fixed assets, inventory, etc.?? Yes, they're all still there on the books. Net of the liabilities and other adjustments on the books, they come out to (more or less) the number currently on the balance sheet as "shareholder equity", currently at $5.111 billion. But that much bigger number has nothing to with the answer to the question "how much has the company made over its lifetime?", which is the aforementioned $384 million, on the aforementioned lifetime $17 billion of revenues. I would also note that the $384 million of lifetime earnings has little to do with "return on investment" over the lifetime of the company, provided you bought shares at the company's public birth. "Paid in capital" is listed on the balance sheet at $4.862 billion, representing the amount of cash deposited in the company's piggy back in exchange for the present 765 million actual shares, or around $6.36/share. If you are lucky enough to have bought shares at that (average) price, figured over the ten years from 1992, you have a not bad compounded 17.8% annual return, at today's close of $32.70. Of course, if you'd sold at $200 in January 2000, you'd have realized a whopping 54% compounded annual return! Which I guess is why many people are still LT holders, for the "stock appreciation potential" and not the "past or future earnings counted as paid out dividends" valuation approach favored by MM, JS and others. While there may seem to be big differences of opinion here, it's clear that unless QCOM can grow revenues and translate those revenues into bottom line (GAAP) earnings, the "stock appreciation potential" will remain just that - potential and not real. David T.