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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (43806)	10/8/1999 3:38:00 PM
From: MileHigh	Respond to of 152472

Would you rather have 30% of $5B or 15% of $15B? Supply and, therefore, lower prices will create demand, JMHO. I want them to be affordable and plenty! MileHigh

To: slacker711 who wrote (43806)	10/8/1999 4:26:00 PM
From: Bux	Read Replies (1) \| Respond to of 152472

If anyone has any sources that indicate that a sale by an ASIC competitor would be bottom-line neutral, I would love to see it. It's not neutral. But my instincts tell me the growth of CDMA is rapid enough that even if the Q's ASIC market share declines to 20% over the next 3 years, which I don't see happening, then the rise in royalties due to volume would allow the Q to continue to grow earnings at a rapid rate. And the earnings that would remain would be the best kind, high margin and protected from competitive threats due to the industries inability to ignore their current investments in equipment even if a more advanced air interface is developed. Keep a tight grip on those Q shares! Bux

To: slacker711 who wrote (43806)	10/8/1999 4:35:00 PM
From: bananawind	Read Replies (1) \| Respond to of 152472

Slacker, If anyone has any sources (Gregg Powers would be great) that indicate that a sale by an ASIC competitor would be bottom-line neutral, I would love to see it. No one has actual numbers as the various royalty arrangements are confidential, and my pencil has always been considerably less sharp than Gregg's. Nonetheless we can speculate how Q may have arranged for near bottom line neutrality. Just for argument assume a 3rd party asic sale carries a 7% royalty on a $28 ASP. Further assume that a handset maker must pay 3% on a handset using Q asics, or 6% on one with a 3rd party asic. Lets use $200 for the handset ASP. If Q has a 45% margin on a Q asic that would be $12.60 margin contribution. Add to this $6.00 (3%X $200) that they get when that asic goes into someone else's phone, for a total margin contribution of $18.60. Now, the 3rd party case. 7% of $28, or $1.96, for the 3rd party asic royalty, plus 6% of $200, or $12.00 for the phone royalty using 3rd party asics, for a total margin contribution of almost $14.00. First observation - the difference is not all that great, certainly not as great as you might think if you just listened to some of the media or street guys. Second observation - there is no corporate overhead cost associated with the 3rd party case, whereas I am not sure if the high gross margin estimates we've heard for Q asics is fully loaded for all costs. Final observation - making $14 on a commercial transaction in which you have had no involvement whatsoever sounds like a pretty good business to me. :-) I can't say if these figures are even close to what the real royalty agreements specify, but I would be very surprised if Q management did not give an awful lot a consideration to this issue when the deals were struck. Best regards, Jim

To: slacker711 who wrote (43806)	10/9/1999 9:02:00 PM
From: qdog	Read Replies (2) \| Respond to of 152472

The problem with this is that I think that Q makes more money off of selling an ASIC and then also collecting a royalty than when somebody else sells the ASIC. If DSP sell's a CDMA ASIC the Q will get a royalty....but I can confidently say that it is not in the 30% range that the Q makes off of their own ASIC sales. IPR's are nice and all, seeing how Lucent and IBM generate some nice revenue from their vast patent portfolio's, but a company needs to manufacture and with good margins, plus agreesively continue their R&D to bring further income into the future pipeline to justify a higher stock price. Now in W-CDMA, just how much of QCOM IPR are really applicable? The CDMA of W-CDMA is in the 2 Mbps fixed portion of 3G. Soft hand-off patent isn't useful in that regard and if it's "fixed" QCOM IPR's are mainly for mobile telephony. Which brings back to a fundemental question, if W-CDMA is going to be the dominant deployed base, will QCOM make ASIC's for this space?