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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (89307)	12/6/2000 10:33:56 PM
From: samim anbarcioglu	Respond to of 152472

Don, >>Who do they collect it from? From the handset maker, at the time the product hits the shelves. >>Do both TXN and NOK have a license requirement, or does the TXN cross-license flow through to its customers? TXN just got it, NOK also does IMO, but possibly NOK does not think so. It has been said (often) that NOK does not need further licence, because their 2g CDMA licence covers all. We'll see. >>How and to what extent does QCOM benefit from the TXN agreement? When Ollila said he will get NOK into the front line in CDMA, I believe him. As they keep doing that (albeit with TXN chips), more royalty will flow our way. How well they do against the Asian manufacturers is to be seen. best, sam a

To: Don Lloyd who wrote (89307)	12/6/2000 11:06:00 PM
From: Keith Feral	Read Replies (2) \| Respond to of 152472

Don: The cross license with TI is probably royalty free. In my interpreation, QCOM needed to give NOK a way to reduce the cost of the licensing terms for 3G CDMA licenses. It would have been a bit absurd to for TI to pay QCOM royalties for ASICs that are providing QCOM with new revenue opportunities provided through the supply of more handsets and base stations. Since NOK is the world's largest handset company, they had to do something to acquiesce NOK which refuses to buy CDMA chipsets from QCT. This deal provides TI with the same level playing field as SpinCo. QCT and TI will both sell their ASICs royalty free to handset and infrastructure providers. However, I wouldn't be surprised if this deal requires TI to buy a certain percentage of their chips from QCT on an OEM basis. This would be the likely case if QCT provides TI with a transfer of technology designs to give them immediate production capabilities. Given their history of problems with CDMA ASICs, TI probably needs the help. This benevolent gesture by QCOM clears up several issues that made no sense to me before. One, I never presumed that QCOM could handle 100% of the global demand for CDMA ASICs. If this market is going to grow as much as I hope(200 million ASICs annually by 2002), QCOM is going to better served if the ASIC market has 2 global suppliers. Two, I never thought that Nokia was going to become a QCT customer. Their disciplined manufacturing model is based on strict gross margin assumptions. They believe that TI has provided them unique operating results. (Don't worry about the fact they don't have any competition). Their relationship with TI was essential to the delivery of these results. They ain't changing for nobody. Three, there had to be a gesture that gave Nokia the appearance of hope. With the new arrangement, I think that NOK can accept the same licensing terms as other equipment makers. The collapse in their TDMA and GSM monopolies comes at a time when there is going to be a need for so much new equipment that the entire industry will be capacity constrained for another 3 to 5 years at the least. This should allow them to sustain their leading market share in wireless despite the slightly lower margins resulting from their royalty payments to QCOM for handsets and infrastructure. By tweaking their economies of scale, perhaps NOK can now maintain the same gross margins for CDMA handsets as they could for their TDMA and GSM handsets. With the rotation of new standards over the next few years, I agree with the point that up to 80% of the handsets will be purchased by existing customers. I am replacing my handset every 12 months. Next year, I'll probably replace my handset twice. Verizon is supplying their customers with new handsets every 12 months.