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To: DownSouth who wrote (28717)	7/25/2000 10:07:49 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

The strategy in this deal is very, very clear. SPINCO can gain the cross licensing it needs to build multi-mode ASICS by trading CDMA licenses with no royalty revenue. QCOM continues to collect royalties and focuses on CDMA applications and new IPR. I think the real issue is related to that. By spinning off the company, Qualcomm addresses the issue of "net licensing revenues" for W-CDMA products. Without the spin-off, Qualcomm trades licenses. With the spin-off, Qualcomm does NO trading of licenses, only selling them. This leaves Spinco with lower margins and Qualcomm with higher margins. --Mike Buckley

To: DownSouth who wrote (28717)	7/25/2000 10:13:13 AM
From: mauser96	Read Replies (1) \| Respond to of 54805

So would Spinco would be on an even foot with other ASIC makers- Would it would have to pay QCOM royalties on any CDMA based equipment it makes? Then companies like Nokia wouldn't feel like they are enriching the "enemy QCOM" when they buy Spinco chips. Spinco becomes a Nokia supplier , a partner, not a competitor.Meanwhile QCOM could concentrate on developing intellectual property and new ideas, not confined to CDMA or even wireless. This sounds similar to the idea behind the Lucent AT&T split up which was very successful. Moore stresses in Living on the Fault Line that physical vertical integration distracts a company from it's core businesses. It has also been pointed out that "think tanks" hidden inside larger companies often find the larger company blocking their best ideas. This development is a complete surprise to me,but it makes a great deal of sense. Somehow I have the hunch that the IPR part of present QCOM has some big surprise up it's sleeve.