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Technology Stocks : The New QUALCOMM - Coming Into Buy Range -- Ignore unavailable to you. Want to Upgrade?

To: JeffreyHF who wrote (5857)	2/10/2010 4:57:18 PM
From: Art Bechhoefer	1 Recommendation Respond to of 9129

Maybe it's because I asked them what does it take to get a response -- a letter directly to the CEO? Art

To: JeffreyHF who wrote (5857)	2/11/2010 3:26:02 PM
From: Art Bechhoefer	15 Recommendations Read Replies (4) \| Respond to of 9129

Here is the text of a letter I faxed to day to Paul Jacobs: Dear Dr. Jacobs: I am an investment advisor and QCOM shareholder since early 1992. I have over 50 years investment experience and am writing you on the basis of that experience. I’m concerned over the amount of cash and marketable securities and the fact that over the last four years, the return on investment hasn't even been enough to cover inflation. Considering possible reasons for underperforming, one has to look at opportunity costs. Over the last four years, a money market fund would have performed better, at literally zero risk. A well managed company should work for its shareholders, who, after all, are the owners. When a company is generating positive cash flow year after year, it is not good governance just to sit on the cash on the notion that something big might come up to invest in. During the last four years, most of the investment of this cash flow has not been for internal development but for acquisitions. The sad truth is that NONE of the major acquisitions during that period – Flarion, spectrum for FloTV, Mirasol, and many smaller acquisitions – have as yet generated a reasonable return on investment consistent with the risks involved. On the positive side, Qualcomm still is among the few companies filing financial statements with the SEC on the day the results are made public, which is something to praise in a period when many other firms have acted recklessly with their own assets as well as taxpayer funds.. Despite its underperformance over the last four years (some people would say over the last 10 years), I think Qualcomm’s intrinsic value from patents exceeds book value, and may also exceed the current stock price, which is one reason I continue holding 28,000 shares. On the books, the company is valued at barely more than its cash horde, suggesting that the company is overcapitalized. The opportunity cost of that cash in today's market is about 6 percent. If the company cannot demonstrate an internal rate of return on that money equal to or greater than 6 percent, it should either distribute it in the form of dividends or buy back excess shares. Holding all that cash goes to issues of management quality and shareholder sensitivity. In wireless technology, I believe few, if any firms are better positioned for growth than Qualcomm. That alone does not justify continuing to hold the shares, however. Qualcomm needs to show a better track record for its investments, and if that is not possible, then it’s time to buy back shares in earnest and increase the dividend. I would strongly suggest raising the dividend to $1.00 annually, which would hardly put a dent in the available cash. When an investor buys a stock that is all promise and no profit, that stock is called a "story stock." Qualcomm actually started out NOT as a story stock, but because of its handling of excess cash and marketable securities, has become one. You should correct that problem.