Techteam:
A little loose with our facts are we? Last quarter's $46mm number was disclosed to be pure royalties, indicative of a reasonably robust royalty rate and inconsistent with the metrics you suggest. Moreover, I am aware of NO cross license agreement to date that has resulted in a permanent net zero royalty to Qualcomm. Agreements with companies such as Motorola did include royalty sharing, up to a specific recovery by MOT, after which the full QC royalty applies.
Calculating net royalties per handset is tricky because one must allocate between infrastructure, subscriber equipment and ASICs (the latter being currently inconsequential). But, for the sake of argument, let's recall that 4mm ASICs were shipped by Qualcomm during the June quarter, 1.3mm of which went to QPE. That leaves 2.7mm MSMs to be sold on the merchant market and this would represent the gating level of third party handset sales (this is, of course, an aggressive estimate since ASICs are not instantly turned into phones so I am deliberately and conservatively overstating the units involved). Now, if infrastructure royalties were zero, $46mm in royalties against 2.7mm handsets sold would foot to an implied royalty per handset of $17 dollars or something north of 5% (given an ASP just under $300). We know that (a) infrastructure royalties were not zero, (b) infrastructure royalties rates are lower then handset royalty rates and (c) that the nominal value of aggregate IS-95 infrastructure revenue for the quarter were less than handset revenue. By my analysis, which tracks network deployments worldwide, I would estimate that something between $600mm and $800mm in CDMA infrastructure was installed during the March quarter (with royalties lagged and recorded in June). Working backwards, I then ascribe roughly $14mm to $16mm of the $46mm in reported royalties to infrastructure, leaving $32mm to $30mm allocable to handsets. With minimal competitive ASIC shipments during the quarter, this implies a royalty rate between $11 and $12 per phone, assuming an upper bound of 2.7mm non-QPE phones. A more realistic 2.0mm to 2.4mm phones would increase the upper bound to more than $15 per phone.
I hope you are more careful and more insightful with your published research then you are with your comments in the Forum.
Best regards,
Gregg |
