Replies to post #18551 on InterDigital Inc (IDCC)

[mschere]

Great 2G income input..But I believe that Nokia has stated that by year end 2004..all of their handsets while not 3G active,,will be 3G forward compatible..Which IMO..would be covered by their 3G license with IDCC..There is a significant amount owed CURRENTLY to IDCC for 3G infrastructure build outs..and I believe that MOST 3G handsets will far exceed the average selling price of 2G sets..NEC and Sharp are paying most of their royalties currently to IDCC based on their 3G licensing rates.

[JimLur]

bluesky, I think the revenues are more in the Samsung case. They are not a IS-95 licensee so only 1/2 of the handsets in the 2002 sales may apply. They also didn't make any GSM infrastructure so as I said in a previous post they may be the one to give us direction on how much we get for handsets.

Try 1/2 of the 23 million handsets into the 20 or 27 million to get an idea.

[rmarchma]

Bluesky re interesting numbers for Nokia and Samsung

I believe that Ericy/Sony, Nokia and Samsung's 2G/2.5G TDMA-based prediscounted royalty rate is about .5%. Nokia's royalty rate estimation from my previous post as follows:

"Posted by: rmarchma
In reply to: teecee who wrote msg# 13478 Date:3/17/2003 7:04:37 PM
Post #of 18550

Teecee Nokia's indicated royalty rate is no more than .5%, before discounts for prepayments, calculated as follows:

Nokia total handset sales in 2002 = 150m (exact amount is 152m handsets)

Nokia average selling price per handset in 2002 = $160 (exact amount is $163 per handset)

$160 per handset x .5% = $.80 per handset x 150m handsets = $120m. IDCC said the 2002 estimated royalty range for Nokia = $100m to $120m. IDCC also said that Nokia gets no prepaid discounts for 2002.

The estimated 2003 royalty range for Nokia is $80m to $90m, due to a required two year prepayment. The prepayment discounts for Nokia appear to run about 20%, therefore the 2003 discounted royalty rate for Nokia is about .4% as indicated. The prepayment advance is non-refundable and does get the cash quicker."

Subsequent Notes: IDCC's estimated royalty for Ericy/Sony, Nokia, and Samsung at this point only include 2G/2.5G TDMA-based standards, as these were the only standards that Ericy/Sony licensed and agreed to pay royalty on thus far. No royalty rate has been determined yet for 3G or for CDMA-based standards for Nokia. We will have to wait for another license rate agreement from a leading manufacturer to determine a 3G and CDMA-based royalty rate for Nokia. However, a subsequent 3G and CDMA-based license with Ericy/Sony would once again establish an MFL 3G/CDMA rate for Nokia. Samsung is not yet licensed for 3G or non-proprietary CDMA-based standards. Samsung is licensed for IDCC's proprietary BCDMA standard though.

Nokia sold no 3G handsets in 2002 that I am aware of, and very little CDMA handsets, probably less than 10% of their total. My above calculation got a maximum rate of .5% based on all Nokia handsets. If you try to factor-out something from Nokia's handset total for some CDMA handsets, you will still arrive at about a .5% royalty rate using the lower end of the $100m to $120m 2002 Nokia estimate ($100m royalty divided by 135m estimated TDMA-based handset sales at 90% of total = $.74 estimated per handset divided by $160 estimated average price = .5% rounded.

I believe that Samsung's rate is also approximately the same .5%, estimated Nokia's MFL rate or slightly higher. I have heard that approximately one-half of Samsung's total in 2002 was from TDMA-based handset sales. Therefore, Samsung sold about 21m TDMA-based handsets in 2002 out of their 42m total. Although I do not have an average selling price for Samsung handsets for 2002, I have heard that it was significantly higher than Nokia. Let's assume an average wholesale price of $200 for Samsung's handsets at .5% = $1 royalty per handset x 21m TDMA-based handsets = $21m estimated royalty from Samsung for 2002. This is only slightly less than $22m to $27m prediscounted estimated total for Samsung for 2002. Therefore, Samsung's royalty rate could be slightly more than .5%. Samsung could posssibly pay a little more than Nokia's royalty rate, because Nokia may be entitled to additional volume discounts off a base MFL royalty rate.