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

To: hueyone who wrote (125914)	12/7/2002 10:02:44 AM
From: Jim Mullens	Read Replies (2) \| Respond to of 152472

Huey, you wrote->>>”Paying $40 per share for a company that has only been able to generate 64 cents a share in shareholders equity over and above what shareholders have put into it during the ten years of its publicly traded existence, would in all normal conditions be considered an extremely speculative investment.”<<< Having not done that analysis I can not disagree with what you state. However, I believe one must keep in mind the significant technological and business accomplishments Qualcomm has achieved over those ten years and at what odds it overcame in doing so. Because CDMA is a disruptive technology, the incumbents in the industry have and continue today to vigorously resist Qualcomm/ CDMA2000. For a significant period of time Qualcomm virtually had to “do it all” (design/develop/manufacture/test/market- infrastructure, chipsets, handsets, software, etc) almost single handedly to bring CDMA into the commercial marketplace. Qualcomm had to invest in several carriers and start-ups in order to promote world wide traction of CDMA. Many of those investment have had to be written down because of the fall in their market value, a great deal of which was brought about by the past three years depression in technology capex. Granted, when looking back, some of those investments do not now appear to be wise decisions on Qualcomm’s part. However, Qualcomm has a lot of company in that regard. Another point one should consider is the vast amount Qualcomm has continued to spend on R&D to advance 3G CDMA. Over the past three years R&D expenditures have continued to increase- ’00- $300M ($.38/share), ’01- $409M ($.51/sh), ’02- $449M ($.56/sh). As Jon aptly pointed out, a great deal of Qualcomm’s value is in its technological strength as represented in part by its vast patent portfolio, assets which are not included on the balance sheet and difficult to ascertain. Again, I realize that one must look at both GAAP and pro forma accounting when analyzing a company, but by screening on only GAAP results one would overlook the significant investment potential of companies such as Qualcomm. Hope this helps- Jim