Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 176.19

+1.9%

1:38 PM EST

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To: Maurice Winn who wrote (13691)	8/13/1998 7:14:00 PM
From: Gregg Powers	of 152472

Awwwk!! Maurice..I am surprised at you. Samsung sells the handsets to the carrier at fair market prices...it's the carriers that subsidize the purchase price for consumers. QC's royalties are predicated on the transfer price between the manufacturer (e.g. Samsung) and the carrier (e.g. SK Telecom) NOT the price that the latter "sells" the phone to its customer. Beyond this, I would note that Korean handset prices from manufacturer to carrier tend to be higher than world market averages. This is what "closed" markets do for you (or to you) as the case may be. The bone of contention between ETRI (the Korean agency) and QC is whether or not ETRI is entitled to royalty sharing on cellular AND PCS phones or JUST cellular phones. The Koreans argue that PCS phones and Cellular phones are basically the same thing, except for the band...so it makes no sense to exclude PCS from the pie. QC responds that while that may be a reasonable sounding argument, the contract--accepted and signed by both parties--specifically excludes any products aside from the cellular band. Contracts are contracts and they exist to define the specific terms and conditions of a business relationship between two parties...QC management can seen no reason to retroactively rewrite a contract to the company's detriment. As I noted before, this is really a tempest in a teapot that would have never come to light if ETRI had not attempted to "try" an untenable case in the court of public opinion. My problem is not with the Koreans trying to squeeze a few extra dollars from QC, but with Marc Cabi's wholesale distortion of the fact-basis of this disagreement (for example, his note suggested that QC's obligation would be to pay ETRI 20% of all Korea-derived CMDA REVENUE...). This is a grotesque and inaccurate perversion of the Herald story...and that is what get's my blood pressure up. Best regards, Gregg

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