Makes for an interesting read....
https://hbr.org/2014/09/profits-without-prosperity
7 replies (most recent on top)
@ 102076: "Reimbursement" for R&D is why businesses who create IP have exclusive rights to their inventions under Pat. and other laws. But the reimbursement for costs of development plus interest occurs over the life of the patent--not every freakin' year or two.
Agree in general but where does "500 million on patent value" come from? QTL still has a lot more fuel in the gravy train.
I think they recognize that QC is over the hill and in the area of diminishing returns for r&d spend. The world has changed, qualcomm failed as a big idea company, making its seed money on omnitracks and hanging is hat on CDMA, picking up some general patents along the way but with increasingly diminishing returns.
A 6 billion dollar spend for 500 million on patent value is what they are looking at, which means for stockholders like JANA the best deal is to rip up the company, drive stock up in the process, and dump it and let it die.
On the other hand, the position about royalties is that QC must be "reimbursed" (and then some) for its R&D spend. Might as well be as inefficient as possible and charge more for SEP. Sounds like the great Patrick Ewing PR nightmare from years past:
"The 1988-99 lockout provided clues that some players were out of touch with the economic reality, which will be a heavy factor in the next agreement. Kenny Anderson lamented that he might have to sell a car from his fleet. John Stockton was shouted down at a players’ meeting in Las Vegas for suggesting there should be any limit to the percentage of league revenues that should go to the players. But it was Patrick Ewing who provided the lasting sound bite when he quipped, “Sure, we make a lot of money, but we spend a lot, too."
I did not get the sense they are anti-R&D. But more that they feel the "synergies" of the unified company is just a means to recklessly spend R&D dollars without much accountability.
Yeah, but they're all about short-term profitability. JANA and the other Wall St. wonks are the ones driving QCOM to get rid of R&D--which means a few years down the line, we'll have virtually nothing in the IP pipeline so that they can milk the profits from patents. They also don't give a ratz@$$ about marketing research. But the reality of marketing is that the average teenager doesn't care if the chip has 8 cores as much as she wants a pink phone.
great read. funny that JANA is all about the buyback, but they do want to shake up the board and rework the executive compensation system.