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

QCOM 174.23

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Dec 22 3:59 PM EST

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To: quartersawyer who wrote (53078)	7/3/2006 3:16:37 PM
From: Art Bechhoefer	Read Replies (1) of 197015

chapq--It's clear that Nokia and its allies are attempting to eliminate CDMA and CDMA2000 as viable systems by claiming incompatibility and higher costs. If they are successful with the Indian government, other major telecom providers will go along with the GSM standard, despite its limitations, and eventually QCOM will be forced to lower its royalty rates just to keep existing customers. All the lawsuits and related actions seem aimed at this outcome, in jurisdictions where Nokia believes it has a good chance of success. I'm not sure what the best strategy is against this kind of treatment (which one could argue amounts to tortious interference with a business). But one strategy would be to notify the recently elected Republican Congressman from San Diego and advise him of the consequences faced by the largest employer in San Diego. Another strategy would be to do exactly what QCOM has already done--file actions against Nokia for infringing certain QCOM patents that are used in GSM and related systems, and against BRCM for infringement related matters. This wouldn't provide any direct help regarding India, unless the Indians come to understand that even some GSM systems, together with WCDMA upgrades, will have to pay royalties to QCOM. My own view over the last couple of years has been that QCOM should have REDUCED royalty rates in order to reduce the incentives these guys have for avoiding payments altogether. Even if this means reduced near term net profits, at least it ensures growing and widespread applications for CDMA and all other variants. The biggest disadvantage, it seems to me, is lack of a single billing mechanism when using GSM or CDMA systems. The compatibility from chip design helps deal with the problem, but a single billing system would definitely be a step in the right direction. Right now, it seems that Vodafone customers can use a special handset for WCDMA or CDMA, giving them access to certain systems in Europe and the U.S., but still less compatibility than is possible with GSM. Whether that issue can be dealt with at a reasonable cost is unclear at this point. Art

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