Some numbers on Royalties/Asic courtesy Jim Frost to think about..
All *Thoughts on Growth*
Worldwide subscriber growth seems to be nicely tracking Q's quarterly MSM shipments on a one quarter lag basis. For instance Q shipped 5 million MSM's in calendar 4Q98. We know they have about a 90% market share in chipsets, so guess 5.5 new subs for 1Q99. Low and behold CDG informs us that was exactly the number. Also note that Q uses ASIC sales in the prior quarter to estimate the current quarter accrual for royalties. These still seem to be tracking to about $15 per new sub, a figure that was discussed at length in prior years on this thread. Thus, 1Q99 new subs = 5.5 million X $15 = $82.5 million royalty. Q reported $77 million accrual for the quarter.
Now, we know that 1Q99 MSM shipments were nine million units. If things continue tracking as before that implies 9.9 million new subs in 2Q99 (calendar) and $148 million royalty for the quarter - WOW! Even the most optimistic analysts are way, way under this figure for their estimate of royalties.
And it gets better. We know that the 1Q99 book to bill for ASICs was 1.7 to 1. If they are all shipped in 2Q99, that would imply more than 16 million new subs forecast for 3Q99, which in turn implies a royalty figure of $240 million for that period. Now, not even I believe that figure, but this should give some of you an idea of the dynamics when the absolute number of new quarterly subs starts getting large, whether that's 2 quarters from now or sometime next year.
Best regards,
Jim
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