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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 174.54-1.2%3:59 PM EST
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To: Clarksterh who wrote (25235)3/26/1999 5:40:00 PM
From: Valueman  Read Replies (2) of 152472
 
Clark:

5) Qualcomm will now pay some smallish amount of royalties to Ericsson for all phones shipped (but they never mentioned having to pay royalties for ASICs even though the general subject of royalties owable to Ericsson came up several times. I would assume from this and item #6 below that they aren't paying appreciable royalties for ASICs, but it would be nice to know for sure. If so this is a better deal than I expected.)

My notes say they will pay a smallish royalty ONLY on the handsets they sell. Period. No ASIC royalties. As a matter of fact, those pass-thru rights make the deal even sweeter. If you buy ASICs from QCOM, you do not have to screw with ERICY. If not, you have to make your own deal with ERICY, which Nokia, for instance, is doing. Think about that. If you want a quick simple solution that uses the best ASICs, and you want the deal unencumbered by IPR issues, buy QCOM ASICs. Otherwise, it is much more complicated. The other ASIC manufacturers? Forget 'em.

10) The royalties for all CDMA modes will be identical. ( It wasn't completely clear whether this included CDMAOne, but my impression was that it did.

I agree. I think at one point they even said that royalties will be independent of the "flavor" of CDMA.

This call cleared up a number of questions for me. The world is our royalty paying customer now. I guess that is the bottom line. Oh--let's not forget the $160 million loss that was just dumped. Watch those EPS #'s jump!
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