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

To: engineer who wrote (114270)	2/25/2002 1:15:20 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 152472

If you don't trust GAAP, then you have no business being in teh[sic] US doing any kind of trading or business. Funny that Qualcomm's guidance didn't give GAAP earnings forecast did it. What business do they have issuing that kind of statement in America? What's up with all this pro-forma crap by American companies? ... LOL Ok, I'll be serious. Although the point is imbedded in my joke as well. Here's the question: How much did QCOM earn last quarter? Rhetorical, of course. And we have several ways to approach the question. There is the contingent who would say "look at GAAP". Then another contingent would say, "wait a minute, GAAP doesn't reflect the real underlying business, look at pro-Forma". Then there is a contingent (me, for example) who would say, "wait a minute, while we're ignoring all the places where GAAP under-states profit, how about looking over here where it under states cost and put together an objective view of the difference between revenue and cost". I'm not accusing Qualcomm of doing anything wrong. I'm suggesting that there's a gap in GAAP that the tech companies are driving a truck-load of wealth through. Qualcomm included, by the way. And I'm suggesting that it is shareholders who bear the cost of that. And merely commenting that they might want to keep an eye on that cost and factor it into computations of profit. At least as close an eye as you keep on the difference between GAAP and "pro-forma" accounting. Qualcomm included. Why? Because investors are going through a painful process of discovering that a dollar of earnings in stodgy boring old-economy companies is more spendable in retirement than a pro-forma option enhanced dollar of tech earnings coming out of new-economy companies. And yet tech companies are more expensive (per pro-forma option enhanced dollar of future tech earnings) than the stodgy old economy stocks. So what we have is a very simple equation being computed, as dollars going in seek future dollars coming out later. And retirement is coming inexorably closer for an undeniably influential bulk of the population. Which isn't doing a lot of good from the supply-and-demand perspective to stock prices of tech companies. Qualcomm included. I really think that the tech economy is going to see some straightening out. I think that companies like Qualcomm and such will emerge on the other side, but that between then and now a slice of the upside is going to get much less expensive. Of course, I may be completely full of horseradish. It's my opinion. Which in the grand scheme of things is just one six billionth of the opinions on the planet. Not much. But it's all I have. So, what's my point in regards to Qualcomm? Next time you compute earnings and do an EPS calculation to justify share price, factor in the cost that isn't in there. Even if GAAP allows you to forget about it. And figure out what shareholder-profit-per-share the company is delivering to shareholders. Not just to employees. I'm suggesting we take an engineer's point of view with regard to the facts. Not a marketing point of view that glosses over what we don't want people to know. I'm suggesting that we are intellectually honest when computing the profitability of a company in which we invest. Even if it's Qualcomm. Now, maybe I don't have the right equation for computing the cost of stock options. But I sure know it ain't zero!

To: engineer who wrote (114270)	2/25/2002 1:32:04 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 152472

>>If you don't trust GAAP, then you have no business being in teh US doing any kind of trading or business.<< it is audacious of you to attack the investor savvy of warren buffett. buffett doesn't agree with current gaap accounting wrt options. after he buys a company, he disolves options plans and pays out comparable cash bonuses (yes, the cash IS recorded as a business expense). YOU would have BUFFETT exit the us markets? YOU? the arrogance or ignorance leaves a HUGE stench.