Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: quidditch who wrote (519)	8/4/1999 1:05:00 AM
From: engineer	Read Replies (2) \| Respond to of 13582

Let me give a little history on the MOT/LU agreement. In the early days, PacBell funded CDMA before it split off Airtouch as a separate entity. this got the very first labratory demo system running. After that was demonstrated publically in Nov 1989, a consortium was formed to further fund the developpment of this technology. the original participants to this were AT&T (now LU), MOT, PacBell (Airtouch), Nynex, Ameritech. LU and MOT were given early better terms on the lic because they agreed to manufacture the equipment in the market. One of these terms was the ability to make CDMa ASICS for sale ONLY to licensees. they pay a royalty on the ASIC and the licesnees pay a royalty on the phone. It is a good thing that MOT is selling ASICS in that it will grow the pie. If Qualcomm maintains 17% of hte pie and the pie grows by a factor of 10, then QCOm grows alot. they will still get a good royalty stream from eihter way Mot sells stuff. As far as MOT making chipsets, they have been trying to do this since 1993. It is now 1999 and they have not even gotten the chipsets to work very well and they want to sell them. It will tend to decimate their phone design team in trying to support the chipsets to outside customers. I would expect it to take more than 3 years for them to suceed at this business, if at all.

To: quidditch who wrote (519)	8/4/1999 2:05:00 AM
From: Clarksterh	Read Replies (2) \| Respond to of 13582

Steven - I also would not necessarily disparage the language in the 10-K--it probably means just what it says--but may not say all we would like it to say. As Jon keenly observes, MOT and LU sales of ASICs "...to licensees is interesting. If those sales of MOT's own ASICs may be made only to licensees (whose? Q's or MOT's?), maybe Q gets a royalty on the back door. There is a major disconnect here. The question has always been whether MOT will pay royalties when it sells an ASIC. I do not believe that anyone was claiming that Qualcomm wouldn't collect any royalties from anywhere in the manufacturing chain when MOT sells an ASIC. Certainly I was not. Legally the only people who can make CDMA products for sale are Qualcomm licensees (or risk an infringement suit) and thus all MOT ASIC sales must be to licensees. This is a given, but that is equally true of all ASIC manufacturers. Thus, when DSP sells an ASIC, Qualcomm collects both an ASIC royalty and a later handset royalty, but (if MOT were not paying royalties on its ASIC sales) when MOT sells an ASIC, Qualcomm collects only the latter portion. Again, the discussion that I was having (perhaps unknowingly just with myself<g>) is about whether it is better for Qualcomm if DSP/VLSI/LSI sells an ASIC, or MOT sells an ASIC; it was never about Qualcomm getting no royalties anywhere in the chain when MOT sells an ASIC. Having said that, I will state, for the record, that I strongly suspect all things are fine in that Qualcomm will get more or less the same royalties from Motorola ASIC's (if Gregg says it is so, it is so). Finally, to say the 10K is not misleading in that case (MOT really does pay ASIC royalties) is IMO, incorrect. They have, by their wording, divided ASIC manufacturers very clearly into two groups: those that pay royalties, and those not in the first group but can still make ASICs for external sale (i.e. MOT and LU). If MOT really does pay ASIC royalties when it sells externally that is definitely a misleading grouping. Clark PS Now that this subject has been beaten into hamburger, I'm done. I don't need paste<g>.