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

To: slacker711 who wrote (48437)	11/4/2005 2:51:43 PM
From: Jim Mullens	Read Replies (3) \| Respond to of 196444

BRCM / NOK6 EC , etall vs QCOM Further thoughts>> Solution 1 is no doubt the best approach... “1. Eliminate the netting, and thus charge the handset mfg 5% of the ASP regardless of who’s chipset resides within the handset. A net benefit to Qualcomm of $1.50 per handset for those with a Q chipset.” The Q should immediately advise its handset and carrier partners that effective Jan 1 2006, thanks to BRCM, TXN, NOK, ERICY, NEC, Panasonic and the EC, and in “fairness to all” / compliance with FRAND, the Q will be eliminating the “unfair” practice of “price netting” resulting in the effective handset royalty payable to the Q increasing by approximately $1.50 per handset based on a $200 ASP for those handsets with a Q chipset. Further, we will be in discussions with the EC shortly and your participation is invited should you wish to state your views.

To: slacker711 who wrote (48437)	11/4/2005 4:14:05 PM
From: Clarksterh	Read Replies (1) \| Respond to of 196444

The difference might only be .55% on the price of the handset, but it is a 10% difference in the royalty rate. We'll have to wait and see how Qualcomm defends this. Perhaps they have some examples of other practices which might stretch the meaning of FRAND. I have to say that this is making a mountain out of mole hill (by the 6 whiners). Average margin on chipset is probably near 45%. Effectively this is about removing the double royalties which is like knocking 5% (the royalty rate) off this. So the margin on the chipset becomes 40%. BFD. As Qualcomm correctly points out it is guaranteed that the chipset vendors provide pricing swings enormously greater than this all of the time (volume discounts, tying of other forms (buy this chipset plus this screen controller and we'll knock 10% off)). That said, the question will be whether the EU recognizes the first order fungibility of the $. (There may be second order tax effects, ...) The funny thing is if Qualcomm had written the contracts a little differently (as chipset discounts rather than royalty discounts) they would have made the same amount of money and had no problems. Clark