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

To: kyungha who wrote (72980)	1/2/2008 3:22:34 PM
From: TCGNJ	Read Replies (1) \| Respond to of 196986

What are the odds of our seeing QCOM put legal troubles behind itself in 2008? TCGNJ

To: kyungha who wrote (72980)	1/3/2008 2:16:44 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 196986

kyungha--The IBM patent application you found is indeed interesting because it appears to provide an algorithm or method of accounting for the use of patents on the basis of actual use rather than the need to license an entire portfolio. Of course, this floating privielge method, to use the words in the IBM patent, isn't necessarily the way licenses are granted, or even close to the methods most companies may be using. But I found it interesting because it might help one determine the intrinsic value of a portfolio of patents. Intrinsic value is really what an investor pays for in a company like QCOM, even though a great deal of this value is carried on the books as zero. That is, the company dutifully charges its research and development costs for new patents year after year, but revenues, if any, produced by those patents don't show up until much later, and even when they show up, it's in the form of licensing fees and royalty payments. The asset value of the patents (except for those purchased from outside sources) remains zero, which is why the overall return on assets for a company like QCOM tends to be way above the industry norm. Evidently, what IBM is doing is creating a method of accounting for patent portfolios that they can sell in the form of software to companies interested either in buying patents or licensing their own. Since IBM has a huge portfolio of patents, not unlike QCOM's portfolio covering a narrower area, the method IBM proposes, if patentable (and why not?) seems particularly applicable to QCOM and might offer a way out of the legal morass surrounding licensing and revenues from its existing portfolio. Art