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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 159.42-1.2%Jan 16 3:59 PM EST
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To: quartersawyer who wrote (79295)7/28/2008 2:36:17 PM
From: genedabber  Read Replies (2) of 197275
 
"I want to see it in the share price," - I think we all want to see it in the share price, but that does not equate to instantaneous EPS. My guess is that "one time payment" included both lump sum for the License Agreement but also the owed Royalties since May 2007. The current and arrears in royalties since May 2007 will have to be accounted for in income in this fiscal year. Future Royalties will be accounted for as they occur. The lump sum payment for the License Agreement will be amortized over the life of the Agreement - 15 years.

The above would be consistent with how Qualcomm has accounted for one time, lump sum payments received with the signing of a License Agreement. For several years, Qualcomm immediately accounted fpor these lump sum amounts as the Livense Agreements were signed. This caused such havoc at the time, that they decided to "smooth" the incorporation of the lump sum by amortizing it over the life of the Agreements. I suggest the same approach applies here. This approach also "masks" the actual amount of the lump sums since the Licensee can also amortize the amount over the life of the Agreement. - Gene
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