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

QCOM 179.26

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To: engineer who wrote (61219)	3/21/2007 9:26:05 AM
From: waitwatchwander	Read Replies (3) of 196971

Who is "they" and what is the long term impact of ice cream deprivation? The deal right now is to evaluate Qualcomm's current patent pool without the basic patents and determine a way to compensate their partners for whatever fundamental shift has occurred. Just like Nokia has done a poor job of setting up an accepted market value for the innovations that they were willing to share, Qualcomm has also done a poor job of separating the value of their patent pool into old verses new innovations. HDR which I believe is the basis of HSxPA is important and has proven market value. So is the fact that a good chunk of Qualcomm's pre '99 innovations are now toast. Those pre '99 parts are all that is required to deliver basic wireless voice/data services. What percentage of the market can be met with each of these major components of Qualcomm's patent pool? Excluding HDR, what value has Qualcomm added, since '99, to extend the live of those pre '99 components? Answers for these questions is what Qualcomm, Nokia and all key industry players need to accept. The problem with Nokia is that they have fed very few of their innovations back into the industry and have partially used this false(?) proposition to justify their stance. Here are my answers. 1) What are Qualcomm's enhancements of the pre '99 component worth? 1% 2) What is Qualcomm's HDR contribution worth? 5% 3) What percentage of the market (in dollars) can be met with pre '99? 20% 4) What is the value of Nokia's pre '99 contribution to the industry? 1% 5) What has Nokia contributed to HSxPA? 1% Blending all these together, gives me Qualcomm at 4% and Nokia at 1%. So I guess I do see the industry rate at around 4% and Nokia's rate being set at 3%. The third question is most critical and I suspect that is why there has been such a rush to boost GSM over the last few years. If you believe the answer to (3) is 40%, Qualcomm drops to 3.5% and Nokia remains at 1%. Going all the way up to the CDMA vs Other ratio of 425M/2672M gives an answer to (3) of 84%. Further assuming data services are going to grow at an annual rate of 15%, over the life of HDR (10 years?), this percentage will fall to around 50%. Using the midpoint of that range (67%), gives Qualcomm a value of around 2.5% and Nokia still remains at 1%. The crux of the issue is the value of Qualcomm's patent portfolio and the old guard has managed to engineer a scenario which accents the low end of it's value (2.5%) and Qualcomm is pumping a scenario which accents the top line (4%). The real answer is obvious somewhere in the middle. The best I can see coming out of the current Nokia negotiations is a standard rate of 3.25% with Nokia being given a reduction of 1/2-1% off the standard rate. Is it at all possible that those numbers have not been put on the table? I always thought that their was little downside risk in this stock. I now realize that may not be the case. The real issue is that ALL folks holding this stock have come to expect a solid (25% per annum) return on their investment. At this point in time, if that doesn't materialize, the bottom side (ie fundamental value) will not hold up because of an over emphasis by analysts et al on being disappointed. Cisco experienced this exact scenario back in 2000 and look what happened to them. ichart.finance.yahoo.com The similarities between these two companies and their stock price patterns is most interesting. Back in the old days, folks (gdichaz) use to dwell on the gorrilla relationships. The last words of Chaz to me were most telling ... Message 18991383 Paul et al will be judged by how well they transition Qualcomm from the old to the new. So far, it seems they have not done a very good job but it is early and the new book has yet to be written. It does look like history is being repeated. I still hope for the good part and not the bad part. So far, we've only been privy to the ugly part.

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