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

To: Dash of Reality who wrote (62857)	4/19/2007 7:22:10 PM
From: matherandlowell	Read Replies (1) \| Respond to of 196868

"Time is on Nokia’s side. As long as they have the ace in the hole contract extension until the end of 2008, they will continue to pursue this resolution." I disagree. I think time is on the Q's side, but the lack of information regarding the exact wording of the 2001 contract and extension makes resolution of this question on this board impossible. I think we are all just trying to understand the situation as clearly as we can given the amount of information that we have. The fact that we don't have all the information (wording in the contracts) makes this a frustrating exercise, particularly since there is money on the line. My understanding is that the 2001 contract gives Nokia an option to renew the 2001 agreement until the end of 2008. However, from what the Q has released in its official PR, it seems that the Q believes the extension agreement is only valid if the existing terms of licensure are followed. If they are not followed, i.e. Nokia sues QCOM for infringement, then the 2001 contract would be violated and Nokia would cease to have any license agreement with QCOM. What I don't fully understand is whether the 2001 contract and extension agreement stipulated that Nokia had no obligation to continue to observe the terms of the 2001 contract during the option period. I can't believe that this isn't clearly stated in such a legal document, but maybe it isn't. If 2009 arrives and Nokia has not signed the extension agreement, they will not have a license for QCOM's IP and they will have to go to court to prove that the Q uses their IP. If they sue QCOM prior to that time, the Q believes that the agreement would be voided and Nokia would have no license, but that is the second issue being brought to arbitration in Los Angeles. I can't see how time is on Nokia's side. Seems to me quite the opposite. Q's short term earnings take a minor hit, but Nokia's right to sell handsets is on the line. No license from QCOM, no right to sell handsets. If it goes to late 2008, I would expect SpinCo, or some facsimile, to emerge. Then QCOM would continue to collect royalties from everyone selling anything with any flavor of CDMA but the QCT division would be sued to pay the going rate for WCDMA patents owned by Nokia. Whether the suits would prevail is unknown but that such litigation would take a great deal of time is indisputable. Does anyone know what royalty rate Nokia currently gets on its CDMA portfolio? My memory is that it is close to zero. I see this as more of a risk for Nokia than I do for the Q. And, as Jeffrey points out, if the EDGE patents hit, Nokia has to fold up the tent. I see waiting as better for QCOM. Nokia puts much more on the line by losing its license with the Q. j.