To: limtex who wrote (61861 ) 4/2/2007 7:29:27 PM From: Eric L Read Replies (2) | Respond to Fuzzy Recall (Sinner Repent)Tongue Lashing Time EL - Not Jorma but NOK CFO Rick Simonson last years 3rd qtr conference call. He said what I thought NOK had said. Once Nokia has ceased actually designing and making CDMA phones, the responsibility for paying royalties on that technology to Qualcomm will pass to its eventual ODM partner(s). That will leave Nokia to pay Qualcomm royalties only for the IPR it owns in GSM and W-CDMA, while Qualcomm will also have to pay Nokia for its IPR in those areas, which may actually work out with Qualcomm owing it more than it owes Qualcomm. In 1992 when Nokia made its initial licensing agreement with Qualcomm, mobile phones were only intended for voice calls and CDMA2000, and or WCDMA standards rather did not even exist. As a result, Qualcomm owned the majority of relevant patents relating to its own priority [proprietary] CDMA specification. However, today, as we are six months away from the partial expiration of our licensing agreement with Qualcomm, we believe and research shows that we are a world leader in WCDMA IPR and Qualcomm's relative contribution to the development of technology used in mobile devices is significantly lower than that in 1992. Our dependence on Qualcomm's CDMA2000 IPR becomes increasingly less relevant as we intend to discontinue our CDMA mobile phone production in R&D by April next year. This means that Nokia will need a license only for Qualcomm's GSM and WCDMA IPR. And importantly, Qualcomm will need access to Nokia's CDMA IPR in addition to Nokia's GSM and WCDMA IPR. As Nokia's IPR position is much stronger than the early days of CDMA, we believe our future licensing agreement should reflect this fundamental change. This is essentially the basis for our debate with Qualcomm as it relates to April 2007. ... Nokia will need a license only for Qualcomm's GSM and WCDMA IPR. And importantly, Qualcomm will need access to Nokia's CDMA IPR in addition to Nokia's GSM and WCDMA IPR. As Nokia's IPR position is much stronger than the early days of CDMA, we believe our future licensing agreement should reflect this fundamental change. This is essentially the basis for our debate with Qualcomm as it relates to April 2007. ... <snip and forward to Q&A> ... I think, what's going on there is no different than it has recently. CDMA has not been accretive to us in gross margins or operating margins in the mobile phone unit, as we said. That's part and parcel the reason why we've taken the charge this quarter that we did to begin the restructuring and the shutdown of our own R&D and production of that unit. The sales there were okay and we're continuing to sell, as we said, in the third quarter, in the fourth quarter, and entering 2007. But we expect to be shut down on the time that we had said earlier with our own product and then use selectively ODM. So no difference there. CDMA had been a drag on our margins, and we're taking action there. seekingalpha.com
