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To: Labrador who wrote (27668)	7/11/2000 12:35:07 PM
From: tinkershaw	Read Replies (1) \| Respond to of 54805

Are you saying that if they use a QCOM chip, then there is no royalty due to QCOM? [that is, why isn't the royalty charged on all the 350M phones in your example?] Also doesn't QCOM have to pay "uncle sam"? The calculations on the chip sales implicitly included taxes. But yes, I did forget taxes on the royalties. However, to be very conservative I put no royalties on Q chip equipped phones. So you could re-do the calculations, but the affect of adding taxes on royalties and adding royalties to all phones would probably mostly offset. Actually I'll do it quickly: $1.575 billion more in revs from royalties. Okay after a 40% tax rate you get $1.335 billion in royalty profits (roughly double). So you get approximately $2.5 billion in profits after taxes/741 million share =$3.37 eps x 65 =$219/1.15^4= $125 fair value today. Just gets better in a Buffetonian chicken scratch school of things. Tinker