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

To: mmeggs who wrote (11653)	6/6/2000 4:01:00 PM
From: foundation	Read Replies (2) \| Respond to of 13582

(((("Message #11653 from mmeggs at Jun 6, 2000 3:38 PM ET But the amount Qualcomm would collect will differ radically from one flavour of CDMA to the next, analyst said. For example, some analysts estimate Qualcomm would rake in as much as five percent of the cost of every handset sold that is compatible with its homegrown next generation standard, CDMA2000. But an alternative standard, W-CDMA, has been developed by a slew of telecoms firms, from Sweden's Ericsson <LMEb.ST> and Finland's Nokia <NOK.N>, to U.S.-based Lucent Technologies <LU.N> and France's Alcatel <CGEP.PA> -- all of which claim a share of the patent rights. Even though Qualcomm claims ownership of the core technology of W-CDMA, analysts said cross-licensing of patents would whittle away its revenues to a fraction of what it would earn from CDMA2000. This is the first time I've heard this, and in such strong language. ("Fraction" in particular) While I suspect that this is just more FUD, does anyone have an educated opinion on whether the need for Q to cross-license makes for net lower royalty revenue?")))) This has been the plan - lots of noses under the IP tent. This - not innovation - is what (W)CDMA is all about. Qualcom, it seems to me, has been very clear on this issue. Use one, use them all - a set price for QCOM IP. If they can do CDMA without QCOM's patents, the more power to them.

To: mmeggs who wrote (11653)	6/6/2000 5:14:00 PM
From: A.L. Reagan	Read Replies (1) \| Respond to of 13582

analysts said cross-licensing of patents would whittle away its revenues to a fraction of what it would earn from CDMA2000. I've been try to 'explain this over here for some time. Assuming QCOM can uphold the "essentialness" of its IPR and doesn't lower its rates, the QTL segment would get full boat royalties on WCDMA implementations until the expiry of "essential" patents. The chip segment, OTOH, is going to have to x-license from other IPR holders to make DS chips. Since the Q (wisely) elected not to participate in patent pools, it will have to negotiate licensing terms with the various WCDMA essential IPR holders in order to make DS chips. If the Q decided not to play in the DS market, and just be an IPR "tollgate" this would be very, very bad from a L/T perspective. (Essentially, the other guys might pay the tolls for a while until patents began rolling off, all the while migrating the standards, and the installed base, further and further away from the basic Q IPR.) There are other "very, very bad" consequences as well that would end up impacting the viability of CDMA2000. It is conceivable that as a manufacturer of DS chips, Q would end up net royalty negative on chips (as, apparently, everybody else would given the number of bowls in the WCDMA soup line - but likely Q would have the lowest net royalty cost of all the DS chip makers). A LOT OF THE FUD BEING SPEWED IS JOCKEYING FOR WCDMA X-LICENSING LEVERAGE. A LOT OF THE OLD QCOM HYPE WAS THAT IT WOULD FREE AND CLEAR NET ITS 5% TOLL ON WCDMA FAR AS THE EYE CAN SEE. Do the math... seek the truth. Q wins - not like Wally Pie-chuck predicts, but still a quantum order of magnitude better than the Cabi view. So, the real big questions, in order to do the math, are: 1. By say 2005, what % of the world will be WCDMA and what % CDMA2000. (Profound implications to Q). 2. What % of the DS chip business will QCOM have? 3. What will Q's net royalty position be to make DS chips? Any reasonable set of assumptions yields a result worse than Pie-chuck's analysis, and better than Cabi's. (You could probably do a simple average of their respective price targets and come up with a reasonable intrinsic 12-month value.) The problem with modeling intrinsic values is that since apparently much of the world trades off the latest AWSJ, Barron's, Reuters, etc. FUD-plant piece, and the note de jour of any random analyst, owning this stock requires the patience of Job and the divine ability to turn the other cheek. Assets will, over time, find their mean value. QCOM is no exception.

To: mmeggs who wrote (11653)	6/6/2000 5:19:00 PM
From: Art Bechhoefer	Respond to of 13582

Based on comments of IJ at conference calls, my understanding is that royalties are paid on every unit that contains QCOM chips or patented technology. A cross licensing agreement may mean simply that the royalty comes not from that licensee but from the company that ends up selling the finished product. The royalties, if based on a fixed percentage of the selling price of the product, must necessarily drop on a unit basis if the price of the unit drops.