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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 151.59-0.4%Jan 30 9:30 AM EST
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To: slacker711 who wrote (68080)8/21/2007 2:19:09 PM
From: slacker711  Read Replies (4) of 197451
 
Nokia doesnt break out WCDMA revenues but we can get a pretty clear picture of its contribution to their revenue line from Qualcomm's estimate for the missing royalties during the 4th quarter. Keitel estimated that the missing profits would amount to 5 cents a share.

Qualcomm has 1.704 billion shares so those 5 cents represent $85.2 million fully taxed dollars. Keitel gave some clear insight into Qualcomm's tax structure during last quarter's call.

seekingalpha.com

And a simple way to think of it is the chip business is primarily offshore tax, probably low rate and the onshore operations essentially the licensing business taxed at full rate.

So a 35% tax rate would mean that Nokia had contributed $131.2 million dollars to QTL.

So what is the royalty rate? Q and Nokia had a bit of a back and forth over the exact rate but I think a rate of 3.5% would be in the right ballpark. At that rate, Nokia's WCDMA revenues would be $3.745 billion. Nokia's total handset revenue in the 2nd quarter $11.538 billion (using 1.34 Euros to the dollar).

That means that WCDMA handset revenues were 32.5% of total handset revenues. I would also add that Nokia has stated that WCDMA handsets are more profitable than GSM....so an even higher portion of their total profits are coming from WCDMA units.

Can I safely say that none of these numbers fall into the "very minor" category?

Slacker
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