Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: kelseysuncle who wrote (79266)	7/28/2008 7:27:26 AM
From: slacker711	Read Replies (1) \| Respond to of 197214

Slacker and David T have already discussed and estimated 2) and 3) and I think I have to agree with their conclusions that Nokia will be paying a smaller royalty and probably paid a huge up front fee that could very well make up for the smaller rate. Just to clarify, I gave some comments/adjustments on David's numbers...that doesnt mean that I necessarily support them. I am still extremely skeptical that we will see a multibillion dollar upfront payment....and even if we did, it wont make up for the drop in royalty payments over the next 15 years. My opinion is that Q received quite a bit of value in getting a 15 year extension as well as the LTE license and in return they are going to get paid quite a bit less than they would have under an extension of the old agreement. Slacker

To: kelseysuncle who wrote (79266)	7/28/2008 9:06:27 AM
From: David E. Taylor	Read Replies (4) \| Respond to of 197214

It seems pretty clear from Keitel's comments that the catch up for 6 quarters of non-payment of royalties by NOK will be accounted for by the Q4 EPS boost of $0.07 to $0.13. They may change their minds on this as they figure out how to handle the upfront payment, and we may well see some revised Q4 2008 and FY 2009 guidance when they do. I think Slacker's 38% tax rate for royalty payments is more appropriate than the 19% I originally used, and that boosts the upfront payment I estimated to the $2 to $3.5 billion range. I'm gonna leave this alone now until I see some updated guidance from QCOM, or the Q4 earnings release. Once we get a better idea of how QCOM is going to amortize out the upfront payment, there will be less assumption/guesstimating of the total payment and its future impact on EPS. Thanks to all the people who commented on my original post on this subject, I was expecting some useful critique, and that's why I posted it in the first place! David