Clark: On royalties and estimates going forward:
<PS On the drop in royalties as a percent of revenues, I actually expect this to pick up again as Qualcomm loses some share in CDMAOne handsets and ASIC's.>
And as infra revenues drop out of the equation entirely.
On the subject of royalties, I suspect that, even as the macro business environment for royalty revenues just became exponentially better in late March, we are not necessarily going to see a straight or predictable graph, at least measured quarter to quarter (and the Street's reaction thereto). Q's Q states that: "Revenues generated from license fees and royalties are subject to quarterly and annual fluctuations...due to variations in the amount and timing of recognition of CDMA license fees, pricing and amount of sales by...licensees and the Company's ability to estimate such sales....[plus currency fluctuations, int'l country risk etc.]"
Q's Q also states that "Royalty revenue is recorded as earned...when reasonable estimates of such amounts can be made....Beginning with the [2nd fiscal quarter 1998], the Company began to accrue its estimate of certain royalty revenues earned that previously could not be reasonably estimated prior to being reported by its licensees." Obviously, this must be permitted by GAAP. (These points may also bear on when we will hear--April 20th after the close?--of the recording of Russian royalties)
But taken together, the foregoing, particularly in light of the changed/expanded business model for CDMA royalties, may make for some short-term hiccups, surprises and changes in gear attributable to reality testing of accruals and estimates.
Regards. Liacos_samui |
