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

To: Wyätt Gwyön who wrote (125993)	12/12/2002 2:42:36 PM
From: Jim Mullens	Read Replies (2) \| Respond to of 152472

Mucho, thanks for your response- 1. In response to my question- >>> What is the actual "out of pocket cost" to the company? Did the company go out on the open market and by these options to give to their employees?”<<< you wrote in part->>>” that is the wrong way to look at it. you are looking for an up-front cash cost. but you are starting with the wrong assumption (that is, the assumption that nothing is a cost unless it is an up-front cash cost)”. And, “instead, you need to look at economic value”. And. “the concept of value as distinct from tangible assets should be very familiar to QCOM investors, who like to harp on about how valuable QCOM's parents are. well, fine, they are valuable. but so are the options that QCOM gives away by the bucketful.” 2. In response to this question->>>” Would it then be appropriate at the time management is including this “ongoing value transfer”- option expense on the income statement, to also inform the shareholders of the estimated increase to profits (“ongoing economic value”) of doing such in the form of increased employee productivity/ loyalty? << You wrote->>>” i didn't answer this before because i thought you were joking. how the hell are they going to estimate this?”<<< My response to your answers to both questions- You apparently on one hand want to assign some “estimated economic value” to the options granted to the employees even though there is no “out of pocket” cost to the company, yet you “thought I was joking” when I asked if it would also be appropriate for a company to “estimate the value” to the company in the from of increased profits resulting from increased employee productivity/ loyalty (retention) by providing such options to the employees. Is there not “economic value” resulting from each aspect of the transaction? You say “how the hell are they going to estimate this?” It may be difficult and may not be precise, but I’m sure that would not keep you from assigning an “estimated economic value” to the option grants. I would think for the sake of consistency, if one assigns a value to one side of the transaction a value should also be assigned to the other side of the transaction. Accounts like consistency you know. Let’s say for example, a company with a revolutionary technology needs a number of very specialized scientists / engineers that are in very limited supply. In order to pool these folks together to develop this technology they need to offer them the opportunity to own 3 percent of the company in seven years. In so doing, the patents they issue in developing and eventually manufacturing/ selling these products may result in the value of the company increasing 2700 percent. Without these folks the company is worthless, and these folks can’t be persuaded to work and stay with the company without the opportunity to own a 3 percent share of the company. What economic value does one assign to the option grants and the resulting benefits to the company for doing such? 4. You wrote>>>” informed analyst, the Wells Fargo analysis”<<< I’m sure some of us may disagree with you as to your choice of words in describing the "analyst". Thanks for your time- Jim