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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 164.53-0.4%Jan 14 3:59 PM EST
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To: rhet0ric who wrote (11190)6/5/1998 3:59:00 PM
From: bananawind  Read Replies (1) of 152472
 
rhetOric,

I'm sure Gregg will have a better answer to your question, but I'd like to make a few points.

First, why assume the only two possibilities are high royalties (assume you refer to the current 5-6% that has been reported here) and zero (or negligible) royalties. Why not the middle ground, say, at 3%? Seems to me this is the most likely outcome of the current controversy and is likely what Ericy is after in the first place.

So, what would this mean financially versus the current royalty rate for cdma2000. Well, lets imagine its 2002 and there will be 75 million new worldwide subscribers this year. No GSM/cdmaOne/TDMA split, just all W-CDMA3%. At $200 per handset that's $15 Billion on which Q's 3% cut would be $450 million, or about $6 bucks a share. This is way oversimplified, but the implications should be clear. 3% of everything is a heck of a lot better than 5% of something one-third as large.

I've reached the conclusion that this is where we are headed. It was a done deal when Ericy and Nokia capitulated to their customer's demands for a spread spectrum 3G interface. The rest is all face saving and negotiating for the lowest royalty rate possible. No way Irwin and Harvey are going to screw their customers and give away the competitive advantage gained when the customer stuck his neck out to support a new, commercially untried, technology. Its not their style.

-JLF

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