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

To: David E. Taylor who wrote (79210)	7/25/2008 6:45:32 PM
From: JGoren	Respond to of 197253

JP Morgan did some numbers with LG to show that nobody else could afford a similar minimum. JP Morgan has a different take on the patent assignment, which I just read: Nokia could only extract value from those patents by suing every handset vendor (getting bogged down in expensive multi-year litigation for a measly 50-100 bps royalty, or sell the patents to Qcom for an upfront cash payment close to the discounted cash flow from the patents and avoid the hassle. Qcom agreed to buy the patents so it could protect its licensee customers against a suit from Nokia. But, I am not sure I agree with the foregoing. Altman or Rosenberg in the CC said something about qcom customers still having to negotiate with Nokia for licenses of something. Seems to me that Nokia has always used its IPR to negate royalties and create a lock out of other competitors. It did it this time too, but where does it leave it. It could have given pass-through rights and retained those essential patents if it thought it would need them in the future if it were going to be active in further development of the underlying technologies. Now, I am not sure where that leaves the infra business if I am right. So maybe I am not. .

To: David E. Taylor who wrote (79210)	7/25/2008 7:00:42 PM
From: genedabber	Read Replies (2) \| Respond to of 197253

Re Aultman's comment " that if QCOM were to offer the same NOK package to other licensees, he would be happy if they'd accept it and offer the same value as NOK". I suggest that the "value" of the Nokia agreement Aultman was referring to had more to do with IPR value that Nokia ceded to the Q than up front hard cash. The addition of patents and patent rights on LTE, OFDMA, and even GSM have huge future financial value, and provide Qualcomm with a much stronger hand in maintaining their royalty rates for future technologies. Gene

To: David E. Taylor who wrote (79210)	7/25/2008 7:46:05 PM
From: A.J. Mullen	Read Replies (1) \| Respond to of 197253

NOK must have considerable confidence in its ability to maintain market share, ASP's and revenues in the high end smartphone market to offer to pre-pay to QCOM a chunk of future estimated royalties in cash. Not its market share, but the entire wholesale value of its wireless products. If that increases faster than the cost of money, then it's getting a (further) discount for prepayment. That assumption doesn't take a lot of hubris in the wireless market. I'm not criticizing your analysis, which I thought careful and thoughtful. It's just that assuming a linear amortization and a constant royalty-rate from 2009-2022 requires the value Nokia sells remains constant. An equally valid amortization schedule would be exponential at the rate of growth of the wireless market. With your analysis, that would suggest a huge payment that possibly even Nokia couldn't afford. As Maurice said, the way for Qcom to get great value out of this deal is for Nokia to shrink under competition. It's possible, maybe it's even likely. Ashley