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

To: KyrosL who wrote (118910)	5/17/2002 10:22:26 PM
From: techlvr	Read Replies (2) \| Respond to of 152472

I think the most important thing is how much current net profit Qcom is generating. That figure is substantial. Regardless of what % of current book value might be from stock sales, IP, or other, it is now annually generating huge sums of $ for shareholders. Every year the figure gets higher. The book value will do nothing but increase.

To: KyrosL who wrote (118910)	5/18/2002 7:05:21 PM
From: Art Bechhoefer	Respond to of 152472

>>Perhaps a more meaningful measurement is retained earnings per share.<< Kyros, retained earnings, operating earnings, net earnings--they're all just pieces of a very complex investment. A lot of what are now liabilities--investments that failed to produce any returns, or that failed in the sense of having to be written off--still have potential over the long haul. Not only that, a lot of these investments have foot-in-the-door value, making possible the sale of chips, more royalty revenues, etc. I think you have to look at this more broadly, and certainly over a much longer time frame. Here's a real world example. In 1949, my father bought a fairly large chunk of stock of Newmont Mining, a company which was very staid and old fashioned, and had a very slow but steady growth in earnings. The stock did virtually nothing for nearly 40 years, certainly underperforming the market as a whole. In 1987, Texas speculator T. Boone Pickens thought he'd like to acquire the company at a time when the shares were trading around 40. To discourage his attempt to get cheap assets, Newmont management declared a dividend of $33 per share, which immediately put the price of the stock up to about $80 but at the same time resulted in a potentially large addition to debt. This successfully drove Pickens away from his takeover attempt, and shortly after the October, 1987 market crash, my father received the largest dividend check he'd ever received in his life. The stock price went back to earlier levels, post dividend. To pay for the dividend, Newmont sold forward about 10 years of gold production at a price of $400 per ounce. The management was pretty skilled when it came to assessing the market for gold. Gold fell below $400, and Newmont nevertheless received its $400 when the price of gold was averaging less than $300! So Newmont paid for its humongous dividend by acting very shrewdly. Now here's the lesson. When a skilled management keeps inventing new products and improving old ones, and the makes strategic investments to get its products into the marketplace, don't underestimate the value of the company. There's more than meets the eye, more than what shows up as earnings per share, and more than what shows up on the balance sheet as shareholder equity. QUALCOMM has a lot of value that doesn't show up on the books. If I had to give only two reasons to buy the stock, they would be: The management is very innovative, and very honest. Compare that to alternative investments. Art