I thought this exchange on royalty rates was pretty interesting. By my calculations, if the royalty percentage had stayed the same as last quarter, QTL would have $48 million more in revenues (~2 cents in profits).
I wonder what sort of programs they spent that money on....and why would it be contra revenue instead of a normal expense? Is this some sort of royalty kickback to Reliance? Sort of suspicious that it shows up in the quarter following their complaints....
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Tim Long - Banc of America
Bill, if I could just ask you a question on the September quarter QTL line. I was a little surprised to see it up only 3% sequentially. If you could just explain if there was anything funny in the quarter there? Because if you look back at the June numbers, you had a pretty good spike in ASP, up 4% or 5%, and unit shipments looked like they were up about 6%. So I am just curious as to why the royalty line with the quarter lag, it seems like the license revenues were about stable, why we didn't see a bigger sequential jump in that line? Has there been any change in overall rate or anything else in the quarter?
Bill Keitel
Tim, no change in rates for licensees. Those rates stay constant. So again, it comes back to a different mix of infrastructural royalties versus test equipment royalties versus phone royalties. And then there are small amounts of special credits that sometime folded into the QTL segment. I think we had a modest amount of those in the September quarter.
Tim Long - Banc of America
Okay. Well, Bill, should I think of it as the prior quarter was helped out on the high side or the June quarter or the September quarter was hurt on the low side? Which was a more normal number would you say?
Bill Keitel
Tim, I will go into a little more specifics for 2007. I think that is the key is 2007, and we will go into a bit more specifics in London.
Steve Altman
Let me just clarify. When we talk about credits or so forth, what we're really talking about is time to time with special programs with carriers, we will provide incentives to carriers to sell more product or focus more on certain applications and so forth. Those types of expenses get allocated to QTL in terms of growing the overall CDMA business. So that impacts the amount. |
