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

To: Gus who wrote (3876)	2/12/2000 12:41:00 AM
From: Bux	Read Replies (2) \| Respond to of 5195

I wish your response was more focused on my analysis but I will satisfy my desire to examine the royalty situation with the points you have raised. QCOM paid IDC $5.5 million and to date, IDC has paid nothing to QCOM. Zip. Zilch. Nada. Of course, IDC or its potential sublicensees (Samsung, Alcatel, Siemens) had no use for QCOM's patents because their broadband approach clearly involved more spectrum than QCOM's narrowband CDMA. Yes but the agreement was worth much more to Qualcomm than $5.5 million, Qualcomm was assured they could continue with commercialization and sub-licensing of mobile CDMA without lawsuits from IDC (assurances we now we know are not limited to narrowband), this agreement has allowed a royalty stream measured in the billions while IDC has already spent the $5.5 million they received. I recall IDC also received assurances that Qualcomm wouldn't claim infringement on whatever CDMA technology IDC was working on at the time but I don't think that technology proved to be profitable. You are way off-base when you claim that IDC's potential licensees (Samsung, Alcatel and Siemens) have no use for Qualcomm's patents! All of these companies are already royalty paying licensees of Qualcomm. Are you being serious? Do either excerpt say anything about a sale of patents? Do you see anything that indicates a license with perpetuity? What about the limitation on bandwidth applicability to 10Mhz? You can call it a sale, a transfer or just an agreement, the name is immaterial but the clause that limits Q's use of IDC's early patents to 10MHz is very material. It proves beyond reasonable doubt that Q's use of IDC patents are not limited to narrowband and we already know that Qualcomm's own patents cover broadband as well as narrowband. So the common misconception that Qualcomm is only about narrowband (but IDC has broadband wrapped up) has absolutely no basis in fact. Not only is there no room for any fancy and creative interpretation that somehow gives QCOM perpetual rights to patents that eventually expire, but given the rate of advancement in technology, IDC and QCOM have both gone on from the state of their contrasting approach to CDMA in 1994 to develop more advanced innovations covered by patents on top of their early patent work. Of course the early pioneering patents are the most difficult to work around. These are the ones that Qualcomm has the rights to use and until I see evidence otherwise I can only believe they have the rights to use them through expiration. Do you think Qualcomm is silly enough to build their entire business around a patent agreement that will expire before the patents themselves? Get real. Do you question the fact that Schilling was already working on broadband CDMA even before Qualcomm was incorporated? Nope. So? IDC is beginning to get credit for the fact that not only does it have fixed and mobile broadband CDMA applicable to 3g, but it also has core TDMA patents that will continue to be useful for a long time. "Getting credit" and "collecting royalties" are two different things. As far as the "core TDMA" patents, I have some serious doubts but admit it is possible. The debate on this subject alone will go beyond the scope of this post but even if so, TDMA growth is limited. I think many will be amazed at the speed of adoption of spread spectrum technologies once critical momentum is gained. This alone will sharply limit the multiple the street will reward any TDMA royalty stream with. That's the most critical assumption of all the anaylsis I have seen: QCOM's ability to impose its royalty regime. You can't in good faith doubt Qualcomms ability in this regard and yet have faith in IDC's ability? I don't think I need to say more here unless you want to support this position with a broad analysis. After all, doesn't that go to the heart of what we've been discussing all along, who has the ability and positioning to achieve the revenue stream that will be most beneficial to shareholders. Lastly, QCOM and IDC have never been mutually exclusive investments given the sheer size of the market. And I'm glad you realize that but I have never made the argument they are exclusive, I'm just trying to identify IDC's prospects of building these two primary royalty streams (TDMA and CDMA) and estimate their future value. That's what this is all about. Other sincere opinions welcome, Bux