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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: DownSouth who wrote (28852)7/26/2000 8:43:35 AM
From: Mike Buckley  Read Replies (1) of 54805
 
DS,

Based on my understanding of the conference call and the specific response to a question asked by an analyst, the following is the scenario regarding royalties which I will refer to as licensing agreements.

1) If a company builds their own chipsets, they have to have a licensing agreement with Q. (Due to the specific nature of Spinco's cross-licensing agreement with Qualcomm, Spinco won't pay dollars but essentially it is a licensing agreement.)

2) If a company buys their chipsets from anyone including Spinco for the purpose of reselling them, they have to have a licensing agreement with Q.

3) The issue that is a little unclear to me from a logistics point of view is for the company that currently buys ASICs from Qualcomm. My understanding is that there is indeed a licensing agreement with Qualcomm that makes the purchase of ASICs from Qualcomm slightly favorable. The customer will continue to enjoy those benefits once the spin-off is complete. Though I don't understand how the details are handled, you're absolutely right that the conference call Q&A you mentioned makes it perfectly clear that for the current customers buying Qualcomm's ASICs their total costs won't increase and Qualcomm's revenue insofar as licensing is concerned won't decrease.

--Mike Buckley
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