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

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From: Jim Mullens	5/5/2005 2:51:38 PM
	Read Replies (2) of 196971

05 05 05 QCOM Spring Mtg Steve Altman Steve Altman on cross-licenses and 3rd Party IPR pass-thru. Steve addresses this issue during his prepared presentation and also during the Q&A from a couple of analysts. The IPR/ royalty rate issues continues to surface as we’ve recently seen statements from Paul Sagawa (and others) re: Nokia’s WCDMA “advantage” (up to 20%) relative to new handset companies without trade able IPR. FAQ from Altman’s presentation “If an OEM sells phones with Q WCDMA or CDMA2000 chipsets/software, are they less exposed to IP challenges from other parties?” Answer- Yes. <<<<<<<<<<<<<<<<<< Altman provided more detail during the Q&A- This is my understanding from listening to Altman’s comments. 1. Not all, but most- 90 – 95%, almost 95% of the Q’s cross-licenses provide a royalty free pass-thru clause. Thus, a handset manufacturer using Q’s chipsets would have royalty free access to IPR of about 95% of companies that have signed licenses with Qualcomm (there are between 120 -130 Q licensees). 2. Those companies that do not have the 3rd party pass-thru provision with the Q, then negotiate their license fee/ royalty rate with the handset manufacturer independently. In these few these cases, the Q’s licenses have a cap rate which limits the rate at which the cross-licensee can charge Q’s handset partner. Altman then stated that that rate is “much lower” than what that handset manufacturer could have otherwise be subjected to. So perhaps, the 20% Nokia advantage, as Sagawa suggested, may be much less for the Q’s chipset customers.

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