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

To: Art Bechhoefer who wrote (62557)	4/12/2007 6:39:23 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 196972

Art, QCOM royalties are not only almost totally irrelevant to the total cost of providing service to subscribers, they enhance adoption because most of the royalties go straight back into developing more technology. Dividends out to shareholders are a small part of the total revenue for QUALCOMM, being about $800 million a year out of annual revenue of $8,000 million a year. So, of all the revenue going from subscribers for any QUALCOMM licensed services, $800 million is what is NOT going back into improving things further for subscribers. But don't forget taxes, which are also going back into subscribers because they own the governments who are collecting the taxes. The USA government which collects the taxes on QCOM profits is providing defences of QUALCOMM so QUALCOMM can go on doing the good things they do. Nokia has decided they don't want to pay QUALCOMM or the USA government and Americans for those services. Americans are apparently happy to accept that new situation. What are the total global revenues today for any QUALCOMM licensed services? Let's say there are 2 billion subscribers worldwide to cellphone services of which about 25% are CDMA-related. But high revenue services are CDMA-related [Japan, Korea, W-CDMA users, business users] while low revenue services are GSM [China, India, South America, Indonesia]. With arpus per month around $50 worldwide [total guess] for the 500 million CDMA users, who are also the main data users by volume [I guess - high volume users can't use other things], that's $25 billion a month or $300 billion a year. Out of $300 billion a year enabled by my technology, I get paid less than the third significant figure. It is patently absurd, which is an excellent pun, to think that cutting the annual revenue from say $300.8 billion to $300.4 billion would really get people excited and make CDMA more competitive with other options such as wifi, GPRS [which also uses QUALCOMM technology but without payment], snail mail, fibre, personal visits, ADSL, cable, dial-up, geostationary, Iridium and what have you. But cutting QCOM dividends by that amount will have a BIG impact on me. A very big impact on me. If I got no dividends at all, that would reduce revenues to $300 billion a year from $300.8 billion. That is assuming that the saving would be competed away by oligopoly service providers, which I don't believe would happen. I think they would continue to charge what the market will bear. Telecom and Vodafone in New Zealand for example do NOT pass on such savings. They charge what the duopoly figures is the right price to maximize their income. They are NOT running a price war. Neither are many service providers around the world. Even if QUALCOMM received no revenue at all, that would cut, for example, $308 billion to $300 billion if the saving was passed on completely. That includes giving away ASICs for NO CHARGE, not just giving away the intellectual property. I shouldn't forget the cost of CDMA-related handsets either. 250 million a year at $200 average selling price = $50 billion a year. Which by itself makes QCOM revenue small if not totally insignificant but $2bn in royalties isn't much at all. Note too the growth rate in CDMA-related subscribers and lack of competition. Flarion is NOT eating our lunch. Wimax is still a gleam in the eye [which might owe the same royalties or more to QUALCOMM]. I don't understand why people have trouble accepting or understanding that argument and keep on saying we should cut our royalties. QUALCOMM is in the process of enabling the most phenomenal change not just since the industrial revolution and bigger than all inventions combined since fire and the wheel, bigger than the invention of humans from chimps [which was like going from a 286 computer to a 386 or maybe a Pentium] and on a par with the invention of DNA. For such a creation, we should get more than a derisory gratuity. Even a waitress gets 15% tip and some thanks. The whole thing is just too ridiculous and it's unbelievable that it is even under discussion and litigation. QUALCOMM royalties have been and still are absurdly low. Mqurice PS: Subscriber data: 3gtoday.com cdg.org