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

To: qveauriche who wrote (114461)	2/26/2002 12:00:57 PM
From: Stock Farmer	Read Replies (3) \| Respond to of 152472

no question is idiotic. But does the information available about stock options permit you to target the % of dilution that will occur as the stock reaches a given profit level Yes. The 10-K publishes a table of distribution of stock options granted. And it is fairly rough. So you could compute dilution as a percent of stock price. And you will note that dilution is not as much a factor as the ratio of equity financing liability faced by shareholders to annual earnings and to shareholder equity (total, or cumulative, retained) For example, if the share price does not go below 23.83, we can calculate an outstanding shareholder liability of at least $936,488,190 assuming a 35% effective tax rate, of which 55% is unrestricted. This works out to about a) 18% of current shareholder equity (5.1 B$) b) 150% of forecast pro-forma earnings ($0.20/sh/quarter) c) 170% of last actual GAAP earnings rate($139 M/quarter) d) 240% of lifetime retained earnings (384 M$) e) 370% of lifetime retained earnings net of mark-to-market losses (249 M$) Even though the number of options outstanding at this price only represents 7.2% dilution (55 M shares on a base of 767 M). And the liability grows with share price. For example, if the share price stays above $35 then it is at least 1.5 B$. Every $1 in share price sets shareholders back by about a month's earnings. Approximately. Options are great things for employees. Cost shareholders lots. Hopefully they benefit by as much, but so far hasn't been the case. Detailed table snipped out of latest 10-K for those who are interested. As to my buy in point? It all hinges on a future that is horribly murky. Past track record gives us a stock price in single digits, and yet I don't think the past is an accurate guide to Qualcomm's future. Which is all over the freakin' map depending on what elements of current reality one chooses to assume will be changed in our future. When I try to triangulate, I get $20-$22, with 50% variability either way. Overlay on this that we're not done with capital constriction yet. Not by a long shot. Again IMHO. So I don't think we've seen the bottom and I do think we'll be able to catch $30 on the way back up. Probably more than once. All things come to he who hustles while he waits :o) But then if I thought I could pick movements in the market accurately then I wouldn't bother with all this hard work rummaging around in the guts of the financial statements now, would I? John ----------- Options Outstanding Weighted Options Exercisable Average Remaining Weighted Weighted Contractual Average Average Range of Number Life Exercise Number Exercise Exercise Prices of Shares (In Years) Price of Shares Price $0.02 to $3.39 9,978 3.15 $ 2.92 8,893 $ 2.94 $3.43 to $6.21 33,190 4.56 5.03 28,220 4.95 $6.25 to $8.01 31,767 6.45 7.10 15,399 7.09 $8.02 to $19.25 7,753 7.08 13.94 3,196 14.04 $23.83 to $66.33 9,794 8.89 54.13 1,524 45.82 $66.35 to $83.50 8,649 8.73 75.27 2,044 77.67 $86.00 to $172.38 7,044 8.89 98.02 1,472 102.82 108,175 6.17 22.20 60,748 11.52