Replies to post #20579 on Qualcomm Inc (QCOM)

[Golfinvestor]

Spin out QCT and your concern goes away.

[richbloem]

Ricardo, I know of only one issue where Q gives a royalty discount based upon a commitment to purchase ASICs from Q and that is in China. In China Q agreed to to a much smaller domestic royalty if using Q's ASICs, however, that was offset with a much larger export royalty. The Koreans bitched about this and Q offered the same terms to them if they wanted it. However, the Koreans said "Uh, no thanks. Upon further review we are satisfied with our terms".

This has to be what the POS is referring to, because the other discounts are not on royalty but on the price of the ASIC based on volume purchasing of ASICs. All companies give quantity discounts so this could not seriously be considered anti-competitive.

If there are any other situations where Q has offered royalty discounts tied to ASIC purchases nobody has ever mentioned it.

[Raglanroadie]

I thought a few months back QCT and QTL made changes to the way they account for in house royalty transactions? If my memory is correct and this did in fact occur maybe this was done in order to eliminate the accounting need for a discount in order to compete with TXN's royalty free cross license if that was in fact the basis for them to begin with. Assuming of course that TXN was the reason what else is a company to do in order to compete with a licensee who does not pay royalties while your own chipset division does internally? Has anyone ever looked at how TXN accounts for their royalties in order to determine if the discounts were necessary from a strictly accounting point of view? If TXN does not have intra department royalties then why not argue that Q is at a cost disadvantage comparatively unless discounts are utilized? My wild guess is no Spinco-2 but rather the chipsets will all be deemed royalty free in honor or accordance with the assendence of CDMA as the dominant technology. Maybe FLO was a taste of things to come. BTW-if this was all about the accounting treatment of royalties then IMO it was a big waste of time on the part of NOK etc, unless of course some dopey regulator buys it hook line and sinker.