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

To: waitwatchwander who wrote (102251)	5/26/2011 5:47:41 AM
From: DanD	6 Recommendations Read Replies (2) \| Respond to of 197280

That revenues deceleration also occurred in the largest period of GDP contraction the world has seen since the Great Depression. The upturn coincides with the end (in economic terms) of that recession. Tells me that management has believed all along in the future of 3G and 4G, and Qualcomm's ability to have significant returns in that future in continuing R&D investment. Is Qualcomm the GE of wireless? Not yet. In 2005-2010 many folks ridiculed that aspiration ad naseum and claimed R&D should be pared back and Qualcomm should concentrate on extracting value from CDMA and that's it. But management continued to innovate, cancelling UMB and other ventures, but continuing to put themselves out there. There is no way that Snapdragon can be considered part of their core competency anymore than TV broadcasting was. Both were risky. Both were products of R&D. One is dead, but Snapdragon still has the potential and trajectory to make up for all or any poor investments of the past. Wireless is going to expand in the coming years to ubiquitous always-on processing and connectivity. Snapdragon gives Q a bigger piece of that pie. The overall economy and the quality of Q's execution will determine just how much of that piece. (Not to mention the quality of their competitors.) Today, Qualcomm still has a chance to be the GE of wireless. I personally believe cutting back on R&D in 2005-2010 would have made that statement untrue. Excelsior! Dan D.

To: waitwatchwander who wrote (102251)	5/26/2011 10:36:03 AM
From: Art Bechhoefer	6 Recommendations Respond to of 197280

defunct -- With R&D running about 20% of revenues year after year, you raise an important point. What is all that R&D producing? Where is the expected return on investment? One of the reasons I have owned QCOM shares since early 1992 is its hefty expenditures to develop and implement new ideas and methods for communicating wirelessly. Companies that spend heavily on R&D generally have faster long term growth rates than those that look for better profits by skimping on R&D. An example is 3M, which, from about 1930 to 1970, was one of the big spenders. 3M could claim year after year that something like one–third of its profits came from new products developed in the previous two years or so, year after year. In contrast, by 2000, 3M had switched its strategy to buying other companies which had products or concepts compatible with 3M products, relying on other companies' research instead of their own on the assumption that is was more cost effective. Unfortunately, the case with QCOM is turned upside down. They spend the money, they develop new products, they hire the best quality staff, but the end results fall below par. Why? I think it's because they don't do a very good job of implementing new product ideas. They don't translate the ideas into new products fast enough, nor do they have a licensing system that provides sufficient incentive to their licensees. I would now question what I thought earlier was a good strategy -- making licensing agreements such that the cost is the same when using one patent and one claim as it is when using dozens. They should have a royalty rate schedule with discounts tied to the number of units sold embodying QCOM IP, or similar incentives to encourage migration to high end devices using QCOM IP. I can cite extreme cases where, for example, a company developed an artificial sweetener made entirely of sugar molecules, constructed in such a way that they didn't get absorbed in the digestive system. They licensed the product to a firm which decided to just sit on it, possibly to preserve an existing artificial sweetener market. Instead of becoming THE sweetener of choice, one finds the product only in a few toothpaste brands, which provide virtually nothing in royalties to the company. QCOM is now in a position where, notwithstanding some 12,000 patents, they are not realizing the intrinsic value of those patents. Yet their licensees do provide a substantial royalty stream. What do they do with the cash? They let it accumulate to the point where cash has become a major part of book value (that's partly because a large proportion of the patents have a value of zero on the books). When you look at book value (assets minus liabilities), all that cash gives you a lower return on investment. That is one reason I have argued (and written to QCOM as well) that the company is overcapitalized. They should either increase dividends or buy back shares, or both, which would lead to a larger return on investment as well as happier shareholders. Art

To: waitwatchwander who wrote (102251)	5/26/2011 12:16:52 PM
From: waitwatchwander	Read Replies (1) \| Respond to of 197280

I see the graphic I uploaded got deleted somehow. Maybe I need to do this as something beyond a guest login. Oh well, here it is again. I'll check later to see if this one disappears too. min.us ps It's peculiar that the shareholder equity graphic didn't disappear? Could someone be playing a game?

To: waitwatchwander who wrote (102251)	5/26/2011 1:05:27 PM
From: BDAZZ	10 Recommendations Read Replies (1) \| Respond to of 197280

Defunct and Art, I am exiting this discussion with this simple comment. Years ago Qcom foresaw the advent of the smart device and upped their R&D spending to ensure they had products ready for this new technology cycle. Qcom is near a ten year high. Nokia decided to reign in spending and play it safe. Nok is at a disasterous low. When looking at interesting graphs that have soured you on Qcom be sure to also look at a Nokia/Qcom share price comparison over those years.