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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

QCOM 169.45

-2.2%

12:23 PM EST

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To: cfoe who wrote (32283)	2/12/2003 8:40:30 PM
From: Jim Mullens	Read Replies (2) of 196545

cfoe:- Regarding the drop off in the Dec qtr QTL EBT $/ MSM to $7.91 from a 3 year average of about $11.75, and Sept 02 of $11.63. As pointed out by Q1000, page 40 of the 10K states- “We generally recognize royalty revenue as earned when reasonable estimates of such amounts can be made. Certain royalty revenues are accrued based on estimates prior to the reporting of such revenues by our licensees. …When our licensees report royalties for which we accrued revenues based on estimates, we adjust revenues for the period in which the reports are received” Cfoe, as you previously replied, there can be a lag of a quarter before the “trued up” numbers are reported. Since Qualcomm is accruing the current quarter, I would have thought the QTL estimates would also have been based on 29 million MSMs and therefore the reported dollars would have been closer to the historical average. I also considered the possibility that the decline could have resulted from lower royalty rates from domestic Chinese sales, but I don’t believe the Chinese handset manufactures have ramped significantly yet. Also, for the CY I believe China will account for about 12 percent of total CDMA handset sales, not enough to swing the composite by 33%, Unfortunately, they didn’t have time to answer email questions during the meeting. I ran another exercise and came up with an adjusted EPS of $0.50 for the Dec qtr (8 cents added) if the historical average for QTL EBT $/ MSM had been applied. Extrapolating the year based upon the first quarter’s EPS $ / MSM (M) factor, and based on MSM sales of – Q1……..29 Q2……..27 Q3……..28 Q4…..…30 Tot Fy..114 results in an FY EPS of $1.97 More fun with numbers- Jim

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