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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: DownSouth who wrote (28852)7/26/2000 6:44:39 AM
From: shamsaee  Read Replies (1) of 54805
 
DS

Your assumption if I may say so is not correct.All manufacturers and customers of QCOM pay a royalty plus a chipset cost.The manufacturers who are horizontal or vertical obviously do not buy chipsets and only pay royalties(this should include the INTC,TXN,MOT,NOK and ETC).Now you have the issue of those who instead of trying to develope their chipset business decide they are better off buying asics from Qcom.Then there is a royalty plus chipset cost involved.The royalties in this case are dependent on size of chipsets bought from qcom and at a certain point stop or decrease once you hit a specific volume number.This was discussed in CC of 3Q and the exact details will never be known unless you can get a copy of the samsung or mot agreement<VBG>.

This is one of the underlying reasons why qcom net margins will be very high compared to spinco.If you look at the financial statement you can pretty much come to the above conclusion.

Any ones comments would be welcome.
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