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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 177.78-2.2%Jan 9 9:30 AM EST
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To: marginmike who wrote (30235)5/18/1999 9:43:00 AM
From: quidditch  Read Replies (2) of 152472
 
Re. royalty accruals and quarterly results. From the Q release:

<Also, actual royalty reports received to date from the Company's licensees for the second fiscal quarter exceed the accrual for the corresponding royalties accrued in the second fiscal quarter. Based on current performance in each of its business units, the Company expects that third fiscal quarter performance will meet or exceed...>

Again, as CDMA customers and markets proliferate and sales increase, the quarterly variations in the accrual, and therefore in the reported quarterly results attributable to royalties, may become more significant as Q! feels its way toward improving the the indicia of predictability of the model for estimating royalty receipts. I believe the model is based on some relationship between handset sales and ASIC sales.

Q! has said that it is conservative in its accrual policies and it will be interesting to see how the quoted statement in the Q! release may play out in Q-3: (i) by its press statement, Q! will have to adjust Q-3 revenues upward to account for the accrual understatement in Q-2 (if this is how it works from their accounting policies) and (ii) the question as to whether the Korean January-March bubble really had the effect of accelerating overall revenues above trend growth rates will be implicit in the current quarter accrual for Q-3 royalties.

Foolish of Q Hardy et. al not to focus on this particular aspect of Q's quarterly accounting issues in a story that is directly on point.

Regards. Liacos_samui

PS: Love it how a little bit of the old adversity from Q!'s ancient foes gets the veterans on the board humming again!!!!!
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