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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting
QCOM 167.27-1.2%10:36 AM EST
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To: slacker711 who wrote (81091)10/16/2008 10:13:49 AM
From: David E. Taylor  Read Replies (3) of 197187
 
The "catch up" royalties for the 5 quarters NOK did not pay through 6/30/08 I estimated to be $1.07 to $1.28 billion. Now it includes 6/30/08 through 9/30/08 so it's for 6 missing quarters.

QCOM's $0.07 to $0.13 EPS estimated adder in Q4 was for those 5 missing quarters, but that's only $170 to $315 million, way less than the amount actually owed by NOK for those 5 quarters.

They would never have added the entire amount owed into FY2008 Q4 because it would really provide a one-time distortion to Q4's EPS.

Now it's changed a bit since the payment will be received in QCOM's FY2009 Q1. For the same reason, they won't book the entire 6Q's past royalties due into Q1 FY2009, and they may not bother with booking a partial catch up payment for the 6Q worth of past royalties due into Q1 FY2009 at all, but just amortize the entire amount over 15 years.

The "kosher" way to do it would be to go back and restate QTL revenues for the 6 quarters with the appropriate NOK royalties added in, then book the remaining part of the upfront payment over 15 years.

I'll have to look at NOK shipments in QCOM's Q4 (6/30/08 through 9/30/08), but roughly, doing it the "kosher" way would use up around $1.3 billion, leaving $1.0 billion for the next 15 years.

But I don't think they have to do that and why bother?

David
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