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

To: Maurice Winn who wrote (118954)	5/19/2002 11:37:13 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 152472

Research and development is also an expense, which tax people allow to be deducted from income immediately rather than calling it capital expenditure. But I consider R&D to be investment capital Maurice, i think this is a valid perspective. however, history has shown that returns on R&D eventually fall to the cost of capital. this is especially true in "crowded markets" like high tech.

To: Maurice Winn who wrote (118954)	5/19/2002 1:23:53 PM
From: Stock Farmer	Respond to of 152472

A refreshing display of intelligence. And a scary thought. Imagine that the two of us should agree on so much and yet also be somewhat polar opposites when it comes to investing in Qualcomm (today)? On R&D as an investment. Yes. So is marketing. Most people miss this fact. The key metric here is not how much is spent, but the degree to which the spending generates a return. Any moron can direct the expenditure of billions on R&D, it takes certain genius to get nothing in return :) Another factor that affects R&D is how well the vector forces are collimated. An ordinary iron bar is full of tiny little magnets all pointing in their own very important self centered directions. Much like an R&D shop, IMHO. But line up a mere 5% of these things and the bar can pick up many times its own weight. Magnetization works on corporate as well as quantum scales. And yes, there is the whole guesswork thing. Positioning one's self three years into the future is difficult, given the rotation of the planet around its axis, the planet's rotation around the sun, the sun's motion through the galaxy and the expansion of space everywhere. And that's computationally quite easy compared to figuring out where geopolitical influence, macro-economic factors and co-chaotic butterflies in China will take the market for certain bit transport protocols as time unfolds. All we can do is expect the future will diverge from the past in a vaguely continuous fashion. Stock options have indeed been super profitable. Speaking as a highly optioned individual. I love the things. You consider that the stock option pay rate has been 'excessive'. I think it's not excessive enough when it comes to yours truly, but more than I want to pay when I'm on the other side of the table. At least I admit to being greedy and biased. Let only the selfless altruists cast stones of aspersion there. As far as options being individually motivating? Well, they motivated this individual. But mostly to obtain more. Whatever that means. The trick seems to lie in the definition of the whatever-that-means part. Which I agree is very difficult to get right for the vast majority in the bowels of the corporation. Who tend to fall into some sort of entitlement allocation trap. I do think the executive officers of the corporation however are in a position to be well magnetized. And directors too. Perhaps even moreso. As far as arbitrary winners and losers? Yes. Millionaire secretaries leap to mind. Kind of a job-lottery, where picking the right company has more to do with how much you earn than how well you do your job once you are there. But such is the nature of a capitalist economy. There will always be eddies and pools in the turbulent flow of capital as it rushes "down hill" under some sort of invisible economic gravity. You wrote I suspect [I have no idea really] that employees look at their cash in hand as a bird in the hand and devalue the stock options as being two birds in the bush. Therefore, I doubt that stock options are an effective way to pay people. Shareholders have to pay two birds instead of one bird in the hand. And we ended up paying a whole flock of birds because of a very volatile share price - while annoying the unlucky losing stock option holders. Well, having been one of these optioned employees I can offer up some first hand observation. Cash is the proverbial bird in the hand. Yes. But options are counted more frequently than an entire flock of unhatched chickens. And much to the same degree. Or perhaps an even better comparison is an entire flock of geese. Recently they have flown south for an extended winter and we hope they plan on flying back north again. Stock options are a very very very effective way to pay people truly outrageous sums of money. If one designs the program and support infrastructure correctly. Now, we may debate that this is not the proper purpose of stock options, and here (if I put on my shareholder hat, as I have been known to do) I agree with you. To a point. But then again, this is a capitalist economy we are talking about. In which the rule is "buyer beware". So it should not be surprising that an entire industry exists to to part individuals with their money by whatever clever artifice is possible, and to the maximum possible extent. Amongst which we find the diverse tools of finance. When I discuss stock options from the point of view of a recipient, I am their greatest fan. When I discuss them from the point of a shareholder, I merely add up the cost and subtract it from the other value. Nothing requires them to be bad, or good. It's just that they need to be recognized for what they are and counted properly. Amazing how many people reject this last step. John