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Pastimes : The New Qualcomm - write what you like thread. -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (5560)	12/19/2002 4:20:18 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 12229

For those who do CAGR [compounded annual growth rate] type analysis, based on profit growth over the last few years, they should remember that when the income is from high margin ASICs, very high margin software and extremely high margin royalties, profit growth isn't linear. Once the underlying costs are paid for, the rest is profit. If another 100 million people buy CDMA phones, the royalty is pure profit. Since we have just entered that realm where profits are seriously exceeding the underlying costs, despite continued hiring and increased expenditure on even more research and development, the prospects for obscenely high profits is great. Not only that, the research and development isn't an expense like hotel accommodation and salesman's salaries which don't leave a long term asset once the expenditure is made. The creative stuff leaves a patent trail decades long. Profits from patents registered today will still be flowing in 10 years [even in the fast changing new technology business]. Profits from a salesman's efforts or his hotel accommodation costs aren't flowing in 10 years unless it's for long term assets such as a 747 or some fundamental infrastructure. Microsoft has shown just what profits can be made from cloning software to another user. Oracle and others aren't doing too badly either. BREW is even better. QUALCOMM just has to manage the quality control and sales, they don't have to do the hard yakker of grinding out the code as the hordes of Microsoft people have to. Royalties are better still. Another radioOne phone gets sold and bingo, more dollars hit the bottom line without touching the sides. Mqurice