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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 173.20-3.3%Nov 6 3:59 PM EST
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From: Jim Mullens11/4/2005 11:08:05 AM
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BRCM- Chipset Royalty Issue

Further comments>>>

A. The Q should be reimbursed for its IPR which apparently by all but a few is valued much higher than those they cross-license with because the Q gets a royalty from the licensee and free use of the licensee’s IPR (if any).

B. The question then becomes the method of charging for the Q’s IPR on an ongoing basis. Apparently, the Q has kept it simple by just collecting a nominal royalty based on the wholesale price of the chipset , the same basic method as the follow for CDMA handset sales.

C. BRCM, apparently wanting the same royalty-free deal TXN has, has balked at that arrangement with the twisted logic that it results in double charging for the chipset because the chipset cost is in the handset cost. IMO, it’s just a perception issue as no one disagrees that the Q is entitled to compensation from the chipset mfg (except apparently TXN) for their Essential IPR.

D. Simple solution. Instead of calling it a royalty and charging a percentage of the chipset ASP, simply charge a $/unit figure- A buck and ½ per unit sold.

$1.50 / $30 chip ASP = 5% but don’t call it a royalty and don’t charge based on ASP. Just give the Q $1.50 for every chip they sell.
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