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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 177.78-2.2%3:59 PM EST
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To: slacker711 who wrote (53687)12/13/1999 2:11:00 AM
From: cfoe  Read Replies (2) of 152472
 
Can you imagine how much Nokia would be paying out over the next 10 years if they agree to 3-5% royalties on the sale of every handset? If I was running Nokia and someone showed me that by agreeing to buy the division I would end up paying billions...Rationally I might know that this will happen anyway but it would be VERY hard to agree to.....

I would agree with you if one takes the view that the royalty payments are pure overhead expense. However, let's take another view. The royalties are buying access to the premier R&D in CDMA technology, the ascendant wireless communications technology.

I am certain that Nokia, or anyone else, would have to spend more than 5% of revenues to develop the quality of CDMA R&D that they will need to compete successfully. I would bet that Samsung takes this viewpoint and instead of resenting or fighting Qualcomm, they use the relationship to develop high quality CDMA phones.

I have been saying it will be NOK for about a month now and still think it will be. If they do the deal and NOK still remains "adversarial" or "resentful" it will be an OK deal, maybe even good, for QCOM, but not great. But if NOK can shift into a partnership with QCOM, it will be great for both parties. And both will get very rich. IMHO.
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