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

QCOM 159.42

-1.2%

Jan 16 9:30 AM EST

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To: David E. Taylor who wrote (79210)	7/25/2008 7:46:05 PM
From: A.J. Mullen	Read Replies (1) of 197254

NOK must have considerable confidence in its ability to maintain market share, ASP's and revenues in the high end smartphone market to offer to pre-pay to QCOM a chunk of future estimated royalties in cash. Not its market share, but the entire wholesale value of its wireless products. If that increases faster than the cost of money, then it's getting a (further) discount for prepayment. That assumption doesn't take a lot of hubris in the wireless market. I'm not criticizing your analysis, which I thought careful and thoughtful. It's just that assuming a linear amortization and a constant royalty-rate from 2009-2022 requires the value Nokia sells remains constant. An equally valid amortization schedule would be exponential at the rate of growth of the wireless market. With your analysis, that would suggest a huge payment that possibly even Nokia couldn't afford. As Maurice said, the way for Qcom to get great value out of this deal is for Nokia to shrink under competition. It's possible, maybe it's even likely. Ashley

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