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To: engineer who wrote (113150)	7/27/2012 3:47:21 PM
From: Art Bechhoefer	6 Recommendations Read Replies (3) of 117891

There are many justifiable reasons for borrowing cash to deliver a larger dividend, even when a company has a good cash position. An example is Newmont Mining, which, in 1987, declared a dividend almost equal to its share price at the time, in order to deter a takeover by T. Boone Pickens. Newmont obtained the cash by selling forward some 10 years of gold production at a price of $400/oz. Gold at that time was around $350 and never reached $400 during the ensuing ten years. The dividend foiled Pickens' takeover and gave shareholders quite a party. Fact is, as I've noted many, many times previously, Qualcomm has too much cash and is overcapitalized, given its foreseeable rate of growth over the next five years or so. Borrowing currently is cheap. Qualcomm could probably borrow in the form of senior notes with a short maturity (e.g., less than five years) at about 3%, with interest tax deductible. The dividend payment need not be a one time affair but could be a regular dividend with an indicated annual distribution of $2, raising the yield to more than 3%. This would capture the attention of numerous fund managers and institutional investors. . . . One should also note today's New York Times column by Paul Krugman, who argues that the current low interest rates benefit mainly the bankers. Time for a change. Art