Gregg, If Samsung handsets are being sold cheaply with the cost recovered in minute charges, then the Korean royalty collecting agency could indeed feel scammed. They perhaps agreed in good faith to a % royalty on handset selling prices, assuming that the value of the handset would be reflected in the selling price of the handset. Therefore they could expect a certain level of royalties.
While one could argue that this is not a deliberate ploy to reduce royalty payments to the government agency, because it is common marketing practise worldwide, one could nevertheless argue that it is indeed a scam.
Tax avoiding benefits can also be passed on to consumers by this process. A company buys a subsidized cellphone and signs a contract. They give the employee the handset. The minutes are tax deductible and the handset cost is depreciated. The employee gets free off-peak minutes and a free handset after hours, which is a nice little tax free perk. Normally a company can't give tax free perks to employees, at least in New Zealand, because they incur a fringe benefit tax.
Tax authorities or the Korean royalty collecting agency could indeed make a case that they are being diddled. Hey, I hope Qualcomm's royalty bearing agreements aren't based on a subsidized selling price or we'll soon be moaning too.
But as you say Gregg, this is relatively a storm in a teacup and will be resolved by some polite meetings or arbitration.
Meanwhile, back in the jungle, Paul Krugman made some interesting comments in his lecture last night - he'll be cover story of the next Fortune apparently. "Could it happen here?" the theme of his lecture last night, meaning a financial crisis in the USA and perhaps European countries, was answered, after a conversion on the road to Damascus which he called his radicalizing event = the June currency intervention by Fed/Japan to ensure some stability while Clinton was in China, "YES!"
Until then, he had thought it not likely. I'll comment more on his lecture after I catch up with Q.com.
Meanwhile, Q.com's price drop seems in keeping with Dow/Nasdaq and the normally more volatile trajectory of Q.com's price.
Mqurice
$80 31 August looking dodgy with all this mayhem! No worries though, it just means we enjoy a smaller P:E. If the Fed prints as I'm sure they will, as there is not much irrationial exuberance in evidence now [me aside!], then the rebound could be very quick. Cash won't just sit rotting in the bank at 2% for long when Q.com reports vastly increased profits due to amazing handset and ASIC sales with big royalties starting to appear. |
