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

To: KyrosL who wrote (118828)	5/15/2002 10:33:50 PM
From: rkral	Read Replies (1) \| Respond to of 152472

"deduct the portion of book value increase that is due to the exercise of employee stock options How much would you deduct from BV because of stock option exercises in FY2000, for example? Asked seriously ... Ron

To: KyrosL who wrote (118828)	5/17/2002 8:52:23 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 152472

The points you raise on book value and adjustments for stock options are good, but complex. I think there are many other issues, but I also think that stock options have to be dealt with almost on a case by case basis. We know, for example, that Irwin Jacobs decided to exercise some stock options recently, paying about one-tenth the market value of the shares. Since the shares he was buying came from QUALCOMM, shouldn't there be an adjustment to QCOM earnings for the DIFFERENCE between what Jacobs paid and the actual market value? That's an opportunity cost. QUALCOMM could have sold the same shares to most of us at a higher price (if they had a direct purchase plan for shareholders). Also, when looking at net change in book value per share, you have to factor in the increase in shares due to splits. It isn't enough to say that book value, at close to one-fifth share price is quite low. What's more important is that many long term shareholders who bought a given amount of stock in the early 90's now see the book value of the shares, adjusted for splits and stock dividends, up about 4-6 times over their cost. And at the same time they see a company with virtually no debt and positive cash flow. Can you find comparable performance in other telecom stocks over a ten-year period? There may be a few stocks that have done better, but my point is that QCOM has done awfully well for its long term shareholders. Art