To: Bill Harmond who wrote (32737 ) 5/25/2007 12:18:43 PM From: Bill Harmond Respond to 24-May-07 14:45 ET In Play Qualcomm: Preview on tomorrow's [today's] International Trade Commission decision (43.79 -1.05) -Update : We note the International Trade Commission decision on the remedy in the Broadcom-Qualcomm patent dispute is scheduled for tomorrow May 25. Stifel notes the I.T.C staff had previously recommended a "downstream exclusion order" against Qualcomm which would keep CDMA 3G handsets from being imported into the United States. This would have an adverse effect on Verizon Wireless (VZ), Sprint Nextel (S) and Alltel (AT). The firm says injunctions are nearly automatic in patent infringement cases before the ITC, and although the President may veto the ITC remedy, such vetoes are very rare. They believe the question here will be the scope of the injunction. The firm says the net of these legal actions will likely limit appreciation for shares of QCOM in the short-term. The firm does not see a short- term solution to the legal barrage QCOM is facing or a rapid resolution of the royalty dispute with NOK. As such, with QCOM currently trading at 24x their 2008 estimate of $1.87, near the high end of its peer average, they believe the firm continues to be fairly valued; especially should one of these pending lawsuits have a significant negative outcome. Oppenheimer says the Commission is unlikely to adopt BRCMs position, as it could disrupt the operations of Verizon (VZ), and Sprint (S). The firm says at the end of March, Verizon's subscribers had 23.1 mln wireless broadband capable devices. Sprint's business plan calls for the shift of its 21 mln iDEN push-to-talk subscribers to its new EV-DO Rev A network, beginning in early FY08. In March, both Verizon and Sprint argued before the Commission that a ban on imports would be harmful.
