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

QCOM 164.53

-0.4%

3:59 PM EST

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To: David E. Taylor who wrote (79224)	7/28/2008 12:43:13 AM
From: kelseysuncle	Read Replies (2) of 197214

They could go back and amend the 6 affected quarters but I don't think they have to, they can just throw it all in Q4 2008 and get up to date that way. I don't think they can "throw it all in Q4", but then I'm not an accountant or a lawyer. Even if they can, I doubt that it would be to their advantage to do so in that it would be a "windfall" that might be subject to higher taxes. I suppose it is possible that Q could have structured the agreement such that they forgave Nokia from past payments but I find this highly unlikely because it would set the precedent that when your license agreement expires all you have to do is wait long enough for Q to re-sign. If they didn't forgive past payments then I think Q has only two options on how to account for the payments due in past quarters: Restate the earnings for all of the affected quarters or declare the past payments as a stockholder dividend. Lawyers or accountant reading this please comment on the validity of my reasoning. QCOM did issue guidance for FY 2008 along with Q4 guidance, it's on the web site. Pro forma revenues for FY2008 $10.3 to $10.5 billion and EPS $2.11 to $2.13, before adding in the $0.07 to $0.13 benefit of the NOK settlement. This was exactly my point, Q has NOT issued revised FY08 guidance on either revenues or earnings. The 7-13 cents benefit to Q4 is not consistent with their previous quarterly guidance nor does it account for the full effect of Nokia's missing payments. So I'm hoping that there will be further clarification of the impacts of the agreement. FWIW as I see it, the new agreement has four impacts on Q's past and future earnings that we don't know the details of yet: 1) The amount Nokia paid for past due royalties, 2) The amount that Nokia paid in upfront license fees, 3) The new royalty rate, and 4) The reduction in legal costs. Slacker and David T have already discussed and estimated 2) and 3) and I think I have to agree with their conclusions that Nokia will be paying a smaller royalty and probably paid a huge up front fee that could very well make up for the smaller rate. I think the rate is higher than either of them calculate but that's only my WAG. If my thoughts above are right, we will soon hear how 1) will affect us shareholders and 4) will continue to be a drag on earnings but will lessen as the multiple law firms close out their books. Cheers, ku

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