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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: DownSouth who wrote (28717)7/25/2000 10:07:49 AM
From: Mike Buckley  Read Replies (1) of 54805
 
The strategy in this deal is very, very clear. SPINCO can gain the cross licensing it needs to build multi-mode ASICS by trading CDMA licenses with no royalty revenue.
QCOM continues to collect royalties and focuses on CDMA applications and new IPR.

I think the real issue is related to that. By spinning off the company, Qualcomm addresses the issue of "net licensing revenues" for W-CDMA products. Without the spin-off, Qualcomm trades licenses. With the spin-off, Qualcomm does NO trading of licenses, only selling them. This leaves Spinco with lower margins and Qualcomm with higher margins.

--Mike Buckley
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