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Technology Stocks : The New QUALCOMM - Coming Into Buy Range -- Ignore unavailable to you. Want to Upgrade?

To: Art Bechhoefer who wrote (5976)	2/16/2010 11:34:40 AM
From: JeffreyHF	Read Replies (1) \| Respond to of 9129

I assume your adjustment must be upwards, due to the vast increase in devices and chipsets that will be sold. Also, multi-mode will be the overwhelming preponderance of LTE sales for decades to come.

To: Art Bechhoefer who wrote (5976)	2/16/2010 4:11:08 PM
From: Maurice Winn	2 Recommendations Read Replies (1) \| Respond to of 9129

Art, we disagree again. < Qualcomm would be pleased to accept a lower royalty rate for patents for LTE. This was logical, inasmuch as QCOM holds proportionately fewer patents for LTE than for the various forms of CDMA. So, if QCOM can get about 4% on CDMA royalties and maybe 2.5% to 3% for LTE, it appears QCOM thinks this state of affairs is acceptable. I do too, but I am also inclined to adjust my valuation of the company's earning power accordingly.> The value of a patent, or horde of patents, is nothing to do with how many of them there are. The denial of a patent-counting method for determining a company's share of the income from a ring-fenced price-fixing cartel such as W-CDMA was Qualcomm's platform Qualcomm paid good money to highly qualified expensive people [third parties] to argue the case that patent counting was not a good idea. Qualcomm was right. Broadcom was right too. The value of and price of a patent are not a function of the cost of inventing the patent, not the share of a technology that the patent represents. The value and price of a patent to maximize the patent owner's income is what the market will bear. If one claim of one patent is sufficient to stymie a product or service which everyone in the world would love to use and would pay $1000 a year to use and the profits to the producers would be $999 per year, then even if it cost only $1 to invent that patent, the right price to charge is $990 a year. Give or take a bit. Qualcomm has got CDMA wrapped up. LTE should have a higher royalty rate than CDMA, not a lower one. If the LTE cartel doesn't like it, then everyone could just carry on using CDMA versions of mobile cyberspace. Qualcomm has got a great position on CDMA. There is no need to reduce that advantage. LTE has got much greater efficiency than CDMA and Qualcomm should be the primary beneficiary of that. If Qualcomm reduces the royalty rate, then all that will happen is that the profits will be shifted from Qualcomm to others in the chain leading to the subscribers - the device makers, the service providers and the spectrum owners. When more data can be squeezed into spectrum, the value of that spectrum goes up. Since Qualcomm is the enabler of that increase in efficiency, they should capture the lion's share of the profits of that increase, leaving enough for the transition to the higher efficiency to take place. Unfortunately, once again, it seems that Qualcomm has undersold the Qualcomm technology and got itself tangled up in a FRAND cartel with small to trivial rewards for enabling that amazing technology. No wonder the share price is sagging to weak. The whole point of spending a fortune to develop such great technology of enormous value to several billion people [and machine to machine and business to business uses] is to make big heaps of profit. It is not a cost plus system. It's a matter of what the market will bear. That's what markets are about. Qualcomm was done on W-CDMA and should have told them to use TDMA if they didn't want CDMA. Now we have been done again with LTE. Meanwhile, we were done again because the GSM Guild managed to keep CDMA technologies at bay for an extra decade. They were not shy about charging what the market would bear and using politicians to ring-fence Europe to help hold the line while GSM built up a huge head of steam. Some people claim that lowering the royalty rate increases the rate of adoption. I have shown many times why that is false thinking and so it has proven to be. Subscribers do not get any lower prices even if QCOM royalty goes to zero, neither do they buy any more devices. The royalty rate is trivially insignificant when seen from the perspective of the total cost to subscribers of 2 or 3 years of device ownership and use, even if the savings were passed on, which they aren't. Mqurice