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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (93459)	7/22/2010 2:24:36 PM
From: FJB	Read Replies (1) \| Respond to of 196647

Starting December 31, 2010, dividends will be taxed at ordinary income rates.

To: Jacob Snyder who wrote (93459)	7/22/2010 5:01:45 PM
From: Maurice Winn	2 Recommendations Respond to of 196647

A rational investor can do arithmetic: <one-time large dividend When companies do this, it has zero sustainable effect on the stock price. Investors buy before the ex-div date, and sell after. > Of course. Why should it have any sustainable effect on the share price other than a permanent reduction by the amount of the reduction in cash? Having a bit of cash for contingencies is good and will show good husbandry and therefore a permanent increase in the share price slightly above the value of the cash. But having too much sitting there waiting to be ravaged is a negative. Paying it out drip feed as regular dividends, with dividends being higher than the company's earnings, so that the cash mountain is depleted, will not trick shareholders, which seems to be the idea. They will see that the regular dividends are being funded by the cash mountain and not simply by earnings so they'll have to guess what management will do when the cash runs low. Another imponderable. The dividend will obviously be cut. How much? Hmmm.... people wanting regular dividends will have to discount the guesswork on that. By simply paying it now, the known known big tax increase can be avoided. Dividends can then be based on earnings and gradually increased as earnings increase. Stock options will take a small hit because of the reduced share price. It would be better to adjust pay rates and share options if that's a problem. I suspect it isn't, given the Great Recession and that Qualcomm employees are probably grateful to still be employed without pay cuts. The top executives could be given a 20% pay cut to show that the company means business and is not feather-bedding. Getting the money out before the dividend tax rise - a BIG one, is the way to go. Waiting for years is another option, hoping for even lower dividend tax rates in another political cycle. Cross your fingers and hope strategy. Maybe Qualcomm is going to relocate to a low tax country. Perhaps split half of the company with the money, along with a load of patents, to a Hong Kong location and list it there and pay dividends based on Hong Kong tax rates. Do a joint venture with ZTE or something. Mqurice