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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 152.43+0.1%2:34 PM EST
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To: carranza2 who wrote (44010)1/6/2005 11:50:32 AM
From: Jim Mullens  Read Replies (1) of 197439
 
C2, Re: QCOM longevity issues/ concerns – Patents / license structure/ future technology evolution- revolution-

Thanks for sharing your thoughts, ending on the positive with “In any event, things look good. Very good”

The recent posts
...report on the Q’s patent/ license position,
...backwards compatibility / evolution with future technologies,
...the impending WCDMA ramp which should last for quite some time
are all compelling reasons for holding this puppy for an extended period of time.
–

However, one short term issue still remains that could derail things. The recent article on 20% GSM royalty rates brings the WCDMA patent pool royalty issue to mind. The Q has most of their WCDMA licenses signed, excepting those in China. Yet, it’s my understanding that the remaining group in the “patent pool” is still unresolved. If those folks demand an additional 15% things WCDMA wise might get a bit sticky.

What could result?

1. Slow the uptake of WCDMA subscribers because to the higher handset costs.
2. Drive WCDMA carriers to another technology choice sooner rather than later.
3. Drive WCDMA carriers to CDMA2000

Europe, after spending over $100 Billion on 3G licenses certainly has great incentive to see WCDMA ramp ASAP. As T Thornley has stated, that ramp will resemble a hockey stick only when WCDMA handset ASPs fall to the $200 range (which he expects before 2005 ye).

Does anyone have added info on the WCDMA patent pool progress/ lack there of?

Is anyone overly concerned about such?

Some additional issues re: such that could impact the Q (negatively / positively) -

1. Manufactures are producing and selling WCDMA handsets without resolution of these non-QCOM royalty amounts.

1.1. What happens when/ if these issues come to a head and a dispute results?

1.1.1. Can/ would a company such as IDCC get an injunction prohibiting further sales until they get paid what they consider their fair fee?

1.1.2. Could the handset manufactures that have already sold WCDMA handsets be required to pay royalties to these companies claiming IPR on those sold handsets?

1.1.2.1. If so, these handset mfgs would no doubt have to keep prices high enough to cover future claims.

1.2. How many companies excluding the Q has not joined the royalty pool?

1.3. Its my understanding that the current WCDMA royalty target is around 5%.

1.3.1. Qualcomm’s licenses are apparently already higher than that figure (5.5% ?)

1.3.2. Could / is pressure being applied to the Q to reduce it’s WCDMA rate and if so-
.............( I believe Modoff at one time expressed serious concern about this)

1.3.2.1. What are the chances that the Q would acquiesce?

1.3.2.2. if so by how much ?

1.4. The Q has stated on many occasions that its cross licenses in many cases have third party pass thru agreements, which apparently reduces / eliminates royalty payments to such cross-licensees.

1.4.1. Do these third party pass thru agreements represent the “silver bullet” that in most cases limit the Q’s handset partner’s WCDMA royalty payments / liabilities? If so,-

1.4.1.2. does this effectively eliminate most concerns re: WCDMA royalty pool issues?

1.4.1.3. does this actually strongly work in Qualcomm favor and eventually significantly strengthen Qualcomm WCDMA chipset business / market share?

Comments appreciated-
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