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

To: marginmike who wrote (61976)	1/13/2000 10:26:00 AM
From: LBstocks	Respond to of 152472

Qualcomm CDMA royalty reasonable' SAN DIEGO - Korean manufacturers of CDMA (code division multiple access) handsets should not expect to see any reduction in royalties paid to Qualcomm Inc., a U.S. company that pioneered the digital wireless technology. "The current rates are low enough to not cause hardship for the consumer," said Irwin Jacobs, chairman and CEO of Qualcomm, during a meeting with Korean reporters at the Wyndham Garden Hotel, near the company's headquarters in San Diego Wednesday. "The company has licensed over 60 companies around the world and we have used an equitable royalty rate with different companies," said Jacobs. He went on to explain that it is very important to keep royalties at a reasonable rate so as not to inhibit the use of the technology and therefore make it too costly for consumers. Jacobs added that the rates quoted in the Korean press are too high and that, while he could not go into detail because of contractual restrictions, the true figures are significantly lower. "Korean companies do not suffer in royalties with respect to other countries. We have a special agreement with Korea that is not available elsewhere," Jacobs emphasized. The company has no intention of increasing the royalty rate for its new products, he said, but different approaches are needed for different equipment, such as laptops. The current subscriber license requires the licensees to pay Qualcomm license fees in advance as well as ongoing royalties based on a percentage of the products' selling price. Commenting on a royalty payment dispute between the company and the Electronics and Telecommunications Research Institute (ETRI), Jacobs said a decision by the International Chamber of Commerce (ICC) arbitration board could be expected around July. There had been efforts by both sides to try and reach an agreement but after the matter entered the public spotlight the ability to come to a compromise was severely restricted, according to Jacobs. The research institute submitted a request for arbitration to the ICC in Oct. 1998, alleging that Qualcomm had breached certain provisions of the Joint Development Agreement. Qualcomm should pay the institute 20 percent of the royalties it receives from PCS (personal communications service) equipment manufacturers as well as the cellular manufacturers, the institute claimed. Qualcomm contends, however, that the 20 percent payment is applicable only to cellular technology. Korea, which commercialized CDMA service in 1996, is a major market for Qualcomm. Sales to Samsung Electronics Co. accounted for nine percent of the company's consolidated revenues in fiscal year ended September 1999, according to the company's filings with the U.S. Securities and Exchange Commission (SEC). Korean companies reportedly have paid about $500 million in royalties to Qualcomm. Korean CDMA handset manufacturers also bought CDMA chips worth $900 million as of end of 1998. The risk Korea took in commercializing CDMA technology has paid off for Korean companies, said Jacobs and that they have done well in both the domestic and export markets. "Korea is the No.1 CDMA supplier in the world today and CDMA products are emerging as the second largest export item. Also, nearly 100 percent of all handsets in use in Korea are manufactured domestically," said Jacobs. Last November, Qualcomm signed an agreement with Korea Telecom (KT) Freetel in which the company agreed to invest approximately $200 million in the Korean wireless carrier to purchase 1.95 percent of its shares. KT Freetel, for its part, agreed to commercially deploy HDR (high data rate) technology developed by Qualcomm for packet data transmission. HDR technology, first demonstrated last November, is compatible with existing CDMA technology. The latest technology supports up to 2.4Mbps in a 1.25 MHz channel. HDR is expected to be competitive with digital subscriber line (DSL) and cable modem solutions, according to the company. "HDR provides a high burst rate, always-on, cost effective wireless Internet access using standard IP (Internet Protocol)," explained Jacobs. Technical trials are expected in the middle of this year, and marketing trials and commercial rollouts are slated for next year. Qualcomm, founded in 1986 by Jacobs, is a leading provider of digital wireless communications products, technologies and services based on the company's CDMA technology. It also licenses and receives royalty payments on its CDMA technology from major domestic and international telecommunications equipment suppliers. The company's total revenues for fiscal year ended September 1999 reached $3.94 billion, an 18 percent gain, reflecting increased sales of CDMA chipsets and phone products. Its net income jumped 85 percent over the previous year to $200.9 million. Updated: 01/14/2000 by Kim Hoo-ran Korea Herald Correspondent