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

To: Wyätt Gwyön who wrote (116093)	3/27/2002 6:13:46 PM
From: Rocket Scientist	Read Replies (2) \| Respond to of 152472

My apologies, because I'm sure you've posted this before, but can you restate your assumptions as to what you assume as "wildly bullish growth for many years" It seems to me that, at 40$/share, QCOM will outperform a 3.5% TIPS with significantly less than 5% annual growth in earnings. And that without taking account the tax most investors have to pay on government bonds but would not be payable on QCOM retained earnings. Of course, at 60$/share, the comparison is much harder, and your point, therefore, more valid.

To: Wyätt Gwyön who wrote (116093)	3/27/2002 8:43:47 PM
From: Art Bechhoefer	Respond to of 152472

MM--If the $600 million Pegaso write off is reinstated, it first becomes a one-time gain on the earnings statement. The net gain in income after taxes and all other expenses eventually shows up on the balance sheet, but it doesn't go to the balance sheet directly. The same was true when QCOM took the write off on its earnings (total earnings, not pro forma earnings). First the entry is made on the earnings/loss statement and then the adjustment goes to the balance sheet. It's more important to see that $600 million (or what's left of it) added to assets because that produces a gain in book value per share. For a company like QUALCOMM, with high potential growth, but also high expenses in R&D and variable profits (or losses) from year to year, what is really important for the investor is the net change in book value per share, for that is the best measure of change in shareholder wealth from holding the shares. I don't take QCOM estimates at face value, as predictions of any sort are just that--predictions. Instead, I look at overall demand in the industry and try to estimate the portion of that demand that can be met by QUALCOMM. This method is notoriously inaccurate to measure year-by-year changes but works reasonably well over a period of five years. Art