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

To: Peter J Hudson who wrote (119304)	5/24/2002 12:23:00 PM
From: JohnG	Respond to of 152472

China kicks off 1X in June China Unicom Would Open 2.5G Network Next Month library.northernlight.com. Story Filed: Thursday, May 23, 2002 9:12 AM EST CHINA, May 23, 2002 (AsiaPort via COMTEX) -- In next month, China Unicom announced that it would open CDMA1X network during the period of World Cup in seven large cities, which was right after the openness of GPRS of China Mobile. Because GPRS and CDMA1X were both the 2.5G, which could enable the mobile phone to send or receive email or connect to notebook to surf web, China Unicom and China Mobile would compete fiercely in this field. China Unicom expressed that it would open the CDMA1X during the period of World Cup in Beijing, Shanghai, Guangzhou, Shenzhen and so on. The bidding for mobile phone would commence soon. According to the introduction, Chinese domestic mobile phone manufacturers were debugging the 2.5 CDMA mobile phone. Because Korea has put successfully the CDMA1X technology into practice several years ago, China Unicom would copy Korean mode. China Mobile expressed that GPRS would ensure the data speed of 13.6K, which could send MMS and could connect to notebook computer. China Unicom expressed that CDMA1X's data speed would be twice times faster than GPRS, the users could order movies or positioning service with precision range from 5m to 10m. From Source: Beijing Morning News page 7, Wednesday, May 22, 2002 info@AsiaPort.Com Copyright (C) 2002 Alestron, All rights reserved 126

To: Peter J Hudson who wrote (119304)	5/24/2002 2:28:18 PM
From: Stock Farmer	Respond to of 152472

I can't believe it. We actually agree on something. Cost = A/N - (A+Sn)/(N+n), as it represents the reduction in claim on company assets, for existing shares, caused by employee option dilutive affect.* Then we get to the following statement: The problem with using market price can be demonstrated by price movement in the last month. Market price has dropped 25% in the month, so options exercised 30 days ago would have a 25% higher cost to shareholders than options exercised today, using your original formula. This statement requires a corollary assertion that your portfolio has neither gained nor lost much in value in the last month. It is a perfectly valid stance. And indeed, one can quite accurately say that the assets one holds are only worth what they will be on the instant that they aren't held any more, and this whole measuring of one's wealth by mark-to-market portfolio pricing is a farce. Quillionaires take note. Or one can say with equal accuracy that this position is arrogance to the n'th degree, assuming that one is right and that millions of others are wrong. A pile of mis-priced shares has mark-to-market value on the instant, if only as collateral to defer margin calls. In describing what folks gain or lose, it is fair to somehow factor in this latter view, because as a shareholder (owner) one has asset value and asset cost, but in a free market one also faces opportunity cost. And if we are describing the gain or loss due to dilution as the dilution occurs, then it is also not too unreasonable to factor in the opportunity cost that was lost, which isn't really a real cost, but which might have been. Kind of like that margin call that happened might not have happened if only the stock price hadn't dipped so low. Maybe what we do to split the difference is factor it in, but keep track of it. Kind of like one keeps track of gainsor losses in one's portfolio along the way, but doesn't really keep them in the end? So maybe we would acknowledge that the market cap of our company might be different from the Asset Value of the company, because price fluctuates all over the map. And we might use little a to keep note of this difference between implied asset value and expected asset value. In which case we could potentially write our agreeable formula as Cost = (A+a)/N - (A + a + S*n)/(N+n) Anyway, I'm off to camp in a tent for the weekend. Perhaps we'll pick this up later. Meanwhile, what do you think? John

To: Peter J Hudson who wrote (119304)	5/29/2002 10:55:25 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 152472

Hi Peter, I'm back. Picking up where we left off, you wrote: I have no problem with this formula, Cost = A/N - (A+Sn)/(N+n), as it represents the reduction in claim on company assets, for existing shares, caused by employee option dilutive affect.* And let's return to our disagreement. Because the temptation of your logic has lead me briefly astray into the vagaries of "opportunity cost". Apologies. Let me start again. The problem with using market price can be demonstrated by price movement in the last month. Market price has dropped 25% in the month, so options exercised 30 days ago would have a 25% higher cost to shareholders than options exercised today, using your original formula. Yes. Options exercised at a higher price have a higher cost to shareholders than options exercised at a lower price. But this is NOT a problem. It is merely a fact. You should expect this!! Important not to confuse what folks gain or lose because the market fluctuates with what folks gain or lose because of option exercise. Must separate the two effects. Let's see what happens when some employee exercises 1000 shares worth $18 in assets each (post dilution) to some hypothetical shareholder Hudson for $40 each. If you don't like my numbers, feel free to substitute your own ;) Anyway, using my numbers, Hudson is suddenly holding $22,000 in very real cost that just hasn't yet come home to roost. That is, $40,000 in cost only nets him $18,000 in assets. Now, in the future, he could hold on until they reach $18 each in present value. Or he might be clever enough to sell these shares to someone much more bullish for $60 each. Who might then moan "blah blah blah, therefore sell QCOM" on a daily basis and still not do so, riding the shares down and up and down and up and down, eventually to settle at $18 or so. This poor soul will eat $42,000 in loss against Hudson's $20,000 gain, but the net effect between them is still a $22,000 loss. Or instead maybe give up in disgust during a depressing interval of very depressed prices, and deliver them into the patiently waiting hands of Shannon at $15 each, to lose $25,000 to Shannon's $3,000 gain... Or any number of scenarios in between. In the end, the employee walks away with $40,000 and shareholders walk away with $18,000 in assets and distribute the remaining $22,000 loss amongst themselves through subsequent trades much like a hole moves through a semiconductor lattice, neither being created nor destroyed. Just shuffled along. When the shares are issued and FIRST sold into the market, there is a pending gain or loss created to the extent that the shares are sold at a price below or above the "fair" value.. Every subsequent transaction merely apportions the ownership of this gain or loss between the various intermediaries. I think you can try out any number of 'before and after' scenarios with any number of intermediate trades. When you add up the gains and losses for all participants, if you've done it correctly the sum will net to the difference between 'fair' price at the moment of exercise and market price. This is OVER AND ABOVE the cost of dilution that creating the shares themselves imposes on shareholders. We calculated that separately. So in addition to dilution cost, I think you can see that there is a Market Mispricing cost of [P-F] per option, where "P" represents market price, and "F" represents fair market value. However, unlike the dilution cost which is borne by ALL shareholders, this Market Mispricing cost is borne only by the purchasing shareholders and is not spread out amongst the existing shareholders. Their holdings are not affected by the market price. What do you think? John