<Wait a minute. The 580 or so spent in G* is in a period spans over the last 5 years. How can you count that as the expense for last year only?>
Qualcomm counted it as "revenue" over the last 4 years.. Qualcomm decided to write almost all of it off.. That was their decision..
What you have to ask yourself is why did Qualcomm ship 31,000 G* phones in FY00 Q3? For a total of 71,000 phones since the beginning of production.. Globalstar had less than 10,000 total subscribers over all 3 Globalstar phone manufactures!! Globalstar was "awash" with Qualcomm phones, and very low on cash... Yet Qualcomm kept shipping those phones!! All 31,000 of them.. You see.. The Vendor Finance Agreement gave Qualcomm almost a "Blank Purchase Order"..
If you look under the Globlastar Balance Sheet Line Item.. You see that the item..
March 31, 2000
Production gateways and user terminals.................... 126.45 Million
Then again 3 months later.. At the end of QCOM FY00 Q3
June 30th, 2000 Production gateways and user terminals.................... 165.67 Million
The Gateways were all delivered at the end of 1998..
So now you can so the math.. 31,000 UT's delivered, and a net increase of almost 40 million dollars on G* Balance Sheet.. Makes the price per UT about $1,300 dollars.. Which is more than the UT's were selling for at the retail level.. Do you really think it cost Qualcomm $1,300 to produce a G* phone? Those were "HIGH MARGIN" devices.. So QWS's margins swelled to over 40% in the quarters that Qualcomm was delivering "unnecessary G* phones".. And QWS generated over 20% of QCOM EBT in FY00 Q3.
In other words.. If Qualcomm did not ship 31,000 or 40 million (High Margin) dollars worth of G* phones to G* who already had over taken delivery of over 40,000 units.. I doubt Qualcomm would have made their FY00 Q3 numbers.. In addition, it should be noted that this was at a time when Globlstars "funding requirements were in serious question", and G* had less than $120 million in Cash left... And with a Cash Burn Rate of over $100 million a Quarter.. Would you ship 40 million dollars in phones to a "customer like G*?" Unless you needed the Revenue to make the numbers?
Of course.. two quarters later.. They wrote it all off!!! It's all there in the SEC statements....
IMO,
PCSTEL |
