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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: voop who wrote (606)	7/10/2000 6:40:49 PM
From: Reagan DuBose	Respond to of 197507

Re: voop - "nagging doubt" and "cross-licensing". I have no specific knowledge nor expertise in the 3G licensing game, but the following seems to me to make sense with respect to QCOM's W-CDMA royalty prospects: 1. 3G Manufacturers who have little or no W-CDMA IP: Royalties that QCOM receives from those 3G manufacturers who have little or no W-CDMA IP will not be materially reduced by cross-licensing, so on those sales QCOM's standard royalty rates should be realized. 2. 3G Manufacturers with essential W-CDMA IP: Because QCOM plans to manufacture and sell W-CDMA ASICs, cross-licensing agreements will probably make sense with those specific 3G Manufacturers having essential W-CDMA IP. This will very likely reduce the net royalty paid to QCOM by those specific Manufacturers. However, the magnitude of this reduction cannot now be determined, as it depends on future agreements. My own feeling is that the QCOM essential W-CDMA IP is more valuable than the IP of the other Manufacturers, and so the resulting agreements are likely to favor QCOM. Such agreements may represent the cheapest way for QCOM to obtain the IP they need to manufacture and sell W-CDMA ASICs. If QCOM did not intend to manufacture and sell W-CDMA ASICs, then cross-licensing would not be needed, and QCOM's standard royalty could probably be the basis for negotiations with ALL Manufacturers. QCOM's announced intention to manufacture and sell W-CDMA ASICs says to me that they expect that market to be more profitable than just collecting royalties, even considering the impact of cross-licensing. Just my musings, Reagan

To: voop who wrote (606)	7/10/2000 8:47:56 PM
From: DukeCrow	Respond to of 197507

My nagging doubt is whether there is cross-licensing of other vendor's IP that dilutes the net royalty for WCDMA. QTL will collect the same royalties as always; no dilution would show up there. If there are any cross-licensing deals, they will show up in the margins of the QCT business (COGS will increase, right?). Basically, we won't know until WCDMA is actually out there, and Qualcomm is selling chipsets. The standard royalties, adhering to the current rate structure, will flow into the QTL segment. Reciprocal cross-licensing royalties paid by Qualcomm to other vendors would not occur until Qualcomm actually starts selling their chips. When WCDMA ASICs are being sold, I would look for decreased margins while ASPs remain at a reasonable level to be a sign that royalties are being paid to others. Someone correct me if I am wrong in my assumptions. Ali

To: voop who wrote (606)	7/11/2000 4:17:22 AM
From: cfoe	Respond to of 197507

My nagging doubt is whether there is cross-licensing of other vendor's IP that dilutes the net royalty for WCDMA. It may be my poor memory (or ignorance) speaking here, but what the heck. Didn't ERICY sign a 3G license last march when they capitulated on their lawsuit against QCOM? Didn't that 3G license mean that ERICY recognized QCOM's essential patents with respect to 3G? Didn't QCOM's management say that the offsetting ERICY IPR was negligible so that the net royalty was close to the full royalty? Wasn't ERICY one of the two original champions of W-CDMA along with NOK? How come the ERICY deal (capitulation) is never, ever referred to by the QCOM-bashers in the analyst and press community? What am I missing here?

To: voop who wrote (606)	7/11/2000 9:35:00 AM
From: carranza2	Read Replies (2) \| Respond to of 197507

You've put your finger on the heart of the 3G issue, voop, at least as far as Q's future in it is concerned. If it turns out that WCDMA will take a commanding lead in 3G, which is possible, the Q's future will depend on whether its patents are sufficiently essential such that the players will come on their collective hands and knees to worship at the Q's altar. The net/net to Q will be whether the inevitable cross-licensing deal with NOK will result in a sufficiently positive royalty flow such that the Q prospers. While some people at SI believe that ERICY made a better deal than the Q, the agreement is confidential. Moreover, it will not be until a year or two down the road until the net effect of the settlement will be known. Obviously, the Q needs to inform the investment community in a painfully detailed manner why its portfolio of patents will apply across the board to WCDMA, and why it believes that any eventual cross-licensing deal will be royalty positive to it. Until that happens, in a convincing manner, the FUD will continue to affect the stock price. I normally agree with the Q's PR policies. However, I think that it needs to speak up on the point I just mentioned. Obviously, there are no problems with CDMA2000, at least from a royalty standpoint.