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Technology Stocks : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Larry Livingston who wrote (24090)	6/3/1998 10:12:00 AM
From: Bill	Read Replies (3) \| Respond to of 36349

As I recall, the royalties were very low, perhaps a couple bucks per card. NM=not meaningful. At least, this is my recollection. Can somebody confirm/deny?

To: Larry Livingston who wrote (24090)	6/3/1998 10:59:00 AM
From: Bobo	Respond to of 36349

Does anyone know what the substance of Rockwell licensing agreement with Pair is? Are we talking real royalties that are going to significantly impact Pair income? Or is this another one of the fabled top secret Pair contracts.? Per the last conf call...Royalties in Q1 were roughly $1.5mm. 2/3's of this is 100% margin, the balance, I think, is reimbursable engineering expenses. This level is expected to continue until production runs of the chip (next year). At this point, it is a per copy agreement. Lets say it is 15% (my estimate) of each chip sold and Rockwell is able to ramp this thing up in the following fashion: yr1, 200k units @$67; yr2, 700k units @$57; and yr3 3mm @$48. That equates to $2mm, $6mm and $22mm. I do not know if this is additive to the existing stream or if there are minimum payments. This is only once scenario and is based on my watered-down assumptions of ADSL growth and potential Rockwell market share. But I believe that for consumer use, the market will ultimately evolve into the next generation of modems. This is based on the trend of modem chip mfr's offering chipsets with v.90 and g.lite compatibility and my belief that splitterless dsl devices will dominate the internet consumer base. My numbers are only once scenario. Play with the assumptions as you will for some sensitivity testing.