cc replay available now
PJ only one patent covers wcdma, re video; must immediately stop selling or assisting sale of the products. Can continue to sell EVDO.
317 patent and 010 patents stay until jan 09 to allow redesign;
as an abundance of caution, have sent letters to customers and asking for representation that the offending chips will not be incorporated into products and have stopped chipping; no technical support and took down parts of website;
order only applies to sales and shipping to US
have been diligently working on workarounds; one chip already has fix and handsets will be avail before end of 1st Q 2008
expect fixes for 317 and 010 well before the sunset period
immediate short term impact as customers transcend to replacement chips
will push forward with all available legal and technical means
Questions:
Modoff DB: quantify impact esp wcdma and legal options? not providing volumes will clarify jan 23 earnings call; Rosenberg: need clarification from judge; avenues asking for additional stays on inj relief and if denied appeal; issues with underlying decisions that will cause appeal
ML: what happens to customer such as MOT in developing new handsets or such as LG who have already shipped product; can you support them re wcdma; solutions announced today are software and pin compatible; expect OEM will be able to transition; new handsets available before the end of the quarter--delay; for new customers they have already switched over and they should not be impacted; if customer already shipping product to the US because; THE SOLUTIONS ARE READY; the problem is ramping up for mfrs and acceptance by carriers; it's how long it takes for the chips to be certiifed and ramped into production
Tim Long, Bank of America: how do carriers feel (last go round VZ not comfortable) and will the fixes cover the last round of infringements? Carriers don't like requalifying a new solution for existing products but appreciate how much effort put into finding a commercially acceptable workaround; we're still shipping workarounds associated with the ITC ruling; will be one solution for all workaraounds; both instances pursuing legal remedies as well as design arounds; won't address Broadcomm's assertions about other patents
Wilson, Credit Suisse: appeal timing and clarification + any view on downstream customers who are really the ones shipping to US; TIMING: we need clarification from judge quickly, stay needs quickly re procedural timing; appeal 1 year; planning to appeal; looking at design arounds for 317 and 010
UBS: process of proviong to ct new chips + separation of the company? Rosenberg: usual process to produce a design around and get comfortable not infringing; there is no specific process for proviing you're not infringing; they have proposed a special master to decide or recommend that not infringing; PJ: continue to examine possibility; injunction against the chipset biz and Qchat biz so separation does nothing for near term but can't speculate on impact of separation on negotiation
Piper Jaffrey: parties to stipulate royalty rate for Qchat if they can; otherwise brief; new set of chips for US will be shipped
JP MORGAN: is the restriction on new products different from ITC, May 29, 2007; so LG, Samsung buying after May 29; relates to chips on sale prior to date and specifically to customers who used those chips; OEM's can develop new
the 4 cent guidance legal defense charge did not include charges for this situation; will give an estimate in jan earnings call
royualties at 6% how to be calculated? will need clarification, but judge indicated once or twice opting for calculation based on chips not handsets
impact on third parties as point of appeal: wcdma would have more impact on T? not want to get into specific impact on appeal at this point (Rosenberg)
Richard Windsor, Nomura: VZ will be addressed by judge later, taking into account existing agreement btwn VZ and Broadcomm;
Jame Fawcett, Pacific Crest: refuses to talk about appeal because want to respect process before the Judge; expect clarification to be very soon; as to 4 new chipsets, are they the only affected chipsets? Sanjay: main chipsets affected, there are some others affected by the order at the current time but small volumes; some uncertainty re details
Tim Luke, Lehman: BRCM-VZ deal covers six patents, including the three in the injunction; there are rumors about other carriers but Qcom has no information
PJ FINALE: realizes other cos will try to use this order to gain business but the other efforts have not been very successful; near term impact; confident will overcome this latest challenge technologically and financially |
