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


To: Maurice Winn who wrote (122727)11/6/2014 3:46:16 PM
From: Art Bechhoefer3 Recommendations

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  Respond to of 173613
 
"Qualcomm is a monopoly." Of course, not because of sheer size but because of its patents, which create a LEGAL monopoly.

When the giant AT&T was broken up around 1980, it wasn't because of patents but because AT&T refused even to let other companies sell phones and modems for use on an AT&T network. Patents give a company a natural and limited monopoly, which is the reason that patents are protected (in most countries, excluding China in this case).

The Chinese will have to prove something else in order for their monopoly/anticompetitive business claims to succeed in the world marketplace. If a Chinese company sells devices inside China that use QCOM patents but pays no royalties, they may get away with it for a time. But what does that do for other Chinese companies that are licensed and that do pay royalties? Furthermore, what does it do for Chinese companies that want to export their devices that incorporate QCOM IP?

My point is that QCOM has recourse to collect royalties from China and elsewhere and likely has backing of countries like Korea, Japan, and Taiwan, and the World Trade Organization members, where numerous firms have licenses and pay royalties.

My concern is that there may be issues other than royalty payments here, especially if Europe and the US itself are conducting investigations. That is what I was trying to get at in my earlier comments that when a company has more than 40% market share, regulators start to look. What do they look for? Higher prices than would occur if the company had less than a 40% market share. It's mainly an issue about prices to consumers – end users. There may also be an issue about Qualcomm's practice of quantity discounts, which some might interpret as a variable royalty rate. If this were the case, then I think we'd see an end to quantity discounts, and perhaps an adjusted royalty rate that would effectively give all licensees a quantity discount, regardless of quantity.

Anyway, in view of Qualcomm's caution that they can't really fix anything with the individual licensees until the Chinese government decides what it's going to do with the anticompetitive business issue, I think it's likely that these problems will be with us for another several months.

But not indefinitely.

Art



To: Maurice Winn who wrote (122727)11/6/2014 8:46:44 PM
From: Elroy  Read Replies (1) | Respond to of 173613
 
Oh cool. Qualcomm is a monopoly.

Hardly!

SIMO makes fantastic LTE transceivers. SIMO expects to sell $12 million of them in 2014, and hopes to sell another $12 million of them in 2015.

Take that, QCOM!