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

QCOM 170.90

-1.3%

Nov 7 9:30 AM EST

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To: Jim Mullens who wrote (32297)	2/13/2003 9:15:51 AM
From: rkral	Read Replies (1) of 196552

Jim, re "The accrual estimates had to have been made in late December and they were still using their conservative 27 million MSMs estimate." What does the accrual (plus estimate) of royalties have to do with the handset estimate? You provided a quote from the 10-K showing QCOM accrues and estimates royalty revenues ("royalties"). slacker711 quoted q1000's notes showing that QCOM estimates handset shipments. Both are current quarter (or year) estimates. But the current quarter royalties do not apply to the current quarter handset shipments, IMHO. Specifically, for F1Q03, the $212 million royalties do not apply to 27 million handsets. It might apply to a 18 million handset (a WAG) estimate made for 2 quarters back, for example. In short, we don't know the time lag between handset shipments and a "reasonable estimate of royalties" for those handsets. Additionally, you have been presenting the ratio of QTL Earnings Before Taxes ("EBT") to QCT chipset shipments. [edit: As you suspect], that is not appropriate in an environment of rapidly increasing chipset shipments because .. we don't know the time lag between MSMxxxx chipset shipments and handset shipments. Someone probably does know those lags, but I can't recall them being presented on this thread. QCOM's 10-K statement "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”" was a bit of an eye-opener. To me it means QtoQ comparisons can be mis-leading, and it's better to compare averages of at least 2 quarters. Regards, Ron

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