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Technology Stocks : Interdigital Communication(IDCC) -- Ignore unavailable to you. Want to Upgrade?

To: Manx who wrote (2886)	12/29/1999 4:14:00 PM
From: Manx	Respond to of 5195

FROM Raging Bull: IDC vs QCOM... By: BlueSkyWaves Reply To: 24176 by KiDav Wednesday, 29 Dec 1999 at 3:59 PM EST Post # of 24294 The conspicuously missing angle to that story and most of the analysis I have seen is that QCOM currently has no TDMA/GSM expertise that allows them to immediately participate in the ongoing effort led by Nokia to use the consensus forged by 3G to reduce GSM royalties of around 20% Nokia's deal with IDC was designed to facilitate this because IDC has TDMA/GSM and CDMA patents. Why is that important when demand for cellphones exceeds supply and voice is driving that demand? Earnings growth. The robust demand is creating the economies of scale with earnings that can only be turbocharged by a gradual reduction of that 20% royalty rate. The ascendancy of NOK and the continued lag of ERICY and MOT have increased the premium for an earnings dynamic with that kind of reality and immediacy. But doesn't QCOM own CDMA? QCOM is the acknowledged technology leader with only 10-15% share of the market. Now that it has shed its infrastructure and handset manufacturing business, it has to figure out a way to delay the natural erosion of its royalty business (80% of its $1000 valuation) especially since its building block patents start to expire in 2006. The courts are one way to do this, but the odds tend to favor the manufacturers (and the supercarriers that share power in telecom). This is a genuine quality of earnings issue against the backdrop of a patent portfolio with building block patents that start to expire in 2006. This deserves more coverage, but does anyone dare? As a way of providing real-world perspective, please follow the saga of Rambus which despite the backing of Intel is encountering tremendous resistance from the DRAM manufacturers' association forcing it to adjust. RMBS' business model resembles that of a toll gate and the near-purity of that income continues to captivate members of the investment community. The flip-side of income with that kind of near-purity is a persistent expense item that tends to get grinded downwards. Semico's Garber said Intel's shunning of Rambus in its new alliance was a stunning development. Intel has dropped Direct RDRAM as its sole successor to PC100 SDRAMs, and this fall embraced PC133 for desktop PCs as well and Double Data Rate (DDR) SDRAMs for servers. Two weeks ago, in another shocking move, Intel pulled the plug on developing a mobile chip-set version that would have used Direct Rambus and instead will adapt its upcoming Solano PC133 chip set to a mobile configuration (see Dec. 14 story). semibiznews.com The Paine Webber analyst pointed to political and regulatory hurdles that stand in the way of the adoption of CDMA (inexplicable failure to distinguish between QCOM's CDMA 2000 vs WCDMA), but the repeated clashes of national industrial policies may really be about the Fairchild Semiconductor ethic that "Real Men have Fabs." It may very well be that in the jungle of technology, the conventional fabless vendors' interests will always be subordinate to the requirements of the manufacturers. Why can't IDC be 'original' instead of shadowing QCOM? IDC has its hands in two pies (TDMA/GSM and CDMA) and IDC is a QCOM wannabe? QCOM is a pure CDMA player with a white-hot stock that interestingly enough may not be good enough now given the increased start-up opportunities in wireless convergence that keep on growing on an almost daily basis. IDC has the opportunity to be a key player in a win-win situation for top tier carriers and manufacturers instead of a contentious single-sourced, win-loss relationship with the technology leader, QCOM, and it is just selling patents? Broadcom is the true progressive model for IDC, not QCOM which has its own unique strenghts and weakenesses. But that journey starts one step at a time.