To: marginmike who wrote (93052 ) 1/31/2001 4:29:44 PM From: David E. Taylor Respond to Mike:Even in the face of these obstacles [China 99% GSM, GSM the "network standard in Europe and other parts of Asia"], Qualcomm CEO Irwin Jacobs insists that when 3G becomes the norm, Qualcomm will earn the same amount of royalties regardless of whether WCDMA or CDMA2000 prevails. However, given that Qualcomm owns all the patents, and hence all the royalties, on CDMA2000, and only a portion of the patents behind WCDMA, Mr Jacobs's logic is not persuasive. Qualcomm is using cleverly worded royalty agreements to plead its case when it is obvious that CDMA2000 would be vastly more profitable for the company, suggests Witt Soundview Group analyst Matt Hoffman. He estimates that the difference in royalty revenue could be as much as three percentage points, due to the other parties, like Ericsson, that stand to cash in on WCDMA patents. Mr Jacobs's argument is even less convincing given that AT&T Wireless's recent agreement with Japan's NTT DoCoMo calls for a GSM network in the US, traditionally a CDMA stronghold, gradually transitioning to WCDMA. Qualcomm applauded the deal, even issuing a press release expressing its endorsement of the forth coming WCDMA network. "The casual investor may have been fooled by Qualcomm's press release, but the AT&T Wireless move was a defeat", says Mr. Hoffman. With no hope of establishing CDMA or CDMA2000 in Europe, and its US market share threatened, Qualcomm's interest in China is understandable. But given the tentative nature of the China Unicom CDMA buildout, not to mention that many countries have already begun their own 3G networks, Qualcomm may have missed the starter's gun.
