(?) Game, Set...
BEIJING, Oct 9 (Reuters) - In a sign Qualcomm Inc still enjoys a high profile in China despite repeated failures to sell its mobile phone technology, its chief executive, Irwin Jacobs, met Premier Zhu Rongji last week, a source said on Monday.
Also attending Friday's meeting, which ran nearly an hour, were top telecommunications regulator Wu Jichuan and China Unicom Chairman Yang Xianzu -- the two men with the greatest power to open the market to Qualcomm -- according to the source, who knew of the talks at Beijing's Tsinghua University.
Why would these three key Chinese want to meet with Dr. J? I doubt that it was to apologize for putting Q through the ringer this year. This meeting, the news (results) of which was may have been delayed by Yom Kippur, has a strong possibility of being the final step leading to Unicom CDMA launch.
If true, then the trip to Korea later this week by Chinese Premier Zhu could be the announcement of joint Korean/Chinese efforts in the build-out of Chinese CDMA. Follows less than one month after Unicom Chairman Yang's visit.
One of the factors in Korea that we have not looked at in depth is royalty rate. It is my understanding that Korea has a "most favored nation" royalty rate agreement with Qualcomm. That is, that they will not pay a greater royalty rate than any other country. Qualcomm negotiated a lower royalty rate with China than Korea is currently paying, effective upon build-out in China. After the China Unicom agreement earlier this year, Korea wanted Qualcomm to lower its royalty rate to equal China's negotiated rate, but Qualcomm said that China rate is not effective until build-out, and therefor the royalty rate will not change until the actual build-out starts. This was early summer, and shortly afterwards Korea announced the handset subsidy ban, and also the possible W-CDMA "defection" of the carriers.
With build-out of CDMA in China, comes reduced royalty rates for Korea, and the elimination of a needle from the Koreans sides, in addition to large contracts.
There is a distinct possibility that the rest of this week will be very, very exciting.
P.S. For those who have not noticed, there are about $100 million worth of October options floating out there right now, with the majority of that money coming in late last week. Why would there be a flood of money into same month options in horrible market conditions? One thought; the Chinese are not likely to be worried about the SEC and insider trading issues.
Match... will have to wait until DoCoMo announces the use of Spinco chip for their W-CDMA roll-out. |
