Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM third quarter fiscal 2008 conference call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded July 24, 2008. The playback number for today's call is 1-800-642-1687, international callers please dial 1-706-645-9291. The playback reservation number is 57610454. I would now like to turn the call over to Mr. John Gilbert, Vice President of Investor and Industry Analyst Relations. Mr. Gilbert, please go ahead sir.

Thank you and good morning. Today's call will include prepared remarks by Dr. Paul Jacobs, Steve Altman, Dr. Sanjay Jha and Bill Keitel. Don Rosenberg will also join the question-and-answer session. Due to previously scheduled business travels several of our executives are offsite and will be dialing in today's call. An internet presentation and audio broadcast accompanies this call and you can access it by visiting www.qualcomm.com. During this conference call, if we use any non-GAAP financial measures as defined by the SEC and Regulation G, you can find the required reconciliations to GAAP on our website. I would also direct you to our earnings release which was provided yesterday and furnished with the SEC today, as well as our guidance announcement released this morning, both of which are available on our website. We may make forward-looking statements relating to our expectations and other future events that may differ materially from QUALCOMM 's actual results. Please review our SEC filings for a detailed presentation of each of our businesses and associated risks and other important factors that may cause our actual results to differ from these forward-looking statements. And now it is my pleasure to introduce QUALCOMM 's CEO, Dr. Paul Jacobs.

Thank you John and good morning everyone. Sorry about the confusion on the earnings call yesterday. We are obviously hoping to get the earnings release and various press release to you earlier, but I suspect that everyone on the call now understands why we were delayed, which was we reached a settlement agreement with Nokia, and that we're quite pleased with the deal. Now we're still assessing the accounting treatment of the settlement. As usual we'll give you our best view today, and we'll update you as we progress through the quarter if there are any significant changes. This settlement was the result of a tremendous amount of effort by a large team of people, including internal and external counsel and I'd very much like to thank. There are many positive aspects of this settlement agreement; and Steve Altman will cover those details later in the call. Unfortunately we are constrained by a confidentiality agreement with Nokia which does limit the amount that we can currently disclose regarding the specific terms of the deal. Turning to the business, just wanted to start by saying we have added two senior leaders from our QCT business. Jim Lederer and Steve Mollenkopf to our Executive Committee. Jim and Steve have played critical roles in QCT's success and we all look forward to their continued contributions serving on the executive committee. I'd like to now highlight our third quarter financial results. Another strong quarter of 3G adoption, including another record quarter of MSM shipments enabled us to again deliver excellent results to our stockholders. We delivered record revenues up 19% year-over-year and pro-forma earnings per share were at the high end of our prior estimates. It's also important to include to remember that this year’s result does not include the Nokia royalties. Worldwide demand…

Thanks Paul. As I am sure you saw in the press release issued last night, we are pleased to report that we have settled all of our litigation with Nokia, and that Nokia has agreed to withdraw its complaint to the EC. In connection with the settlement we and Nokia have entered into a new 15-year agreement that continues until 2022. Under this new agreement, Nokia has been granted a license under all of our patents for use in their mobile devices and infrastructure equipment. In exchange not only will Nokia pay us a very substantial upfront payment, but through the term of this agreement it will also pay us ongoing royalties on all of its mobile devices that it sells, whether those devices are based on CDMA standards including WCDMA CDMA2000 and TD-SCDMA or whether their mobile devices are based on OFDMA standards including WiMax and LTE. Nokia has also agreed not to assert any of its patents against us, enabling us to integrate Nokia’s technology into our chipsets. In addition Nokia has agreed to assign ownership of a significant number of Nokia’s patents to us, many of which Nokia has declared as being essential to OFDMA GSM and WCDMA. Months ago, we announced that we have signed our first Tier 1 manufacturer to a royalty bearing license covering single mode OFDMA including LTE and WiMax subscriber equipment. We are very pleased to now have Nokia, the world's largest handset manufacturer sign up to a single mode OFDMA royalty bearing subscriber license as part of this new license agreement. We believe that this demonstrates what we have publicly said regarding our OFDMA patent portfolio and its substantial value. I am delighted with this outcome. We believe that this is a very positive agreement for QUALCOMM and for Nokia and will open up opportunities for the companies work together in a number of areas. Due to the confidentiality agreement with Nokia, we will not be able to provide any more details on the terms of these transactions. In a few minutes I’ll turn the call over; actually right now I will turn the call over to Bill Keitel, who will give some color on the financial impact of these transactions and what they mean for QUALCOMM going forward. Thank you.

Steve, this is Sanjay. I'll follow you and Bill will follow me. Good morning. QCT continued our track record of strong execution in the third quarter and I'd like to highlight the results. We shipped approximately 86 million chipsets which represent our 12th consecutive record quarter of shipment. This is 32% higher than the same quarter last year. QCT generated revenues of $1.76 billion in third fiscal quarter of 2008. This was our 9th consecutive quarter of record revenue and represents a growth of 29% year-over-year. In the past few quarters, we have attributed our growth in shipment to entry-tier products destined for emerging market. In the third quarter of fiscal 2008, an increase in demand for high speed data capable chipsets intended for advanced wireless devices drove our growth. EV-DO shipments increased 16% quarter-over-quarter and QCT’s single chip EV-DO devices started to ship in volume quantities and contributed to the growth during the fiscal third quarter. The QSC6075's unmatched level of integration, enables feature rich wireless devices to reach price points suitable for mass-market. UMTS shipment increased 27% from fiscal second quarter. QCT shipment shipped a record quantity of the UMTS chipset last quarter and we believe we continue to gain market share in the UMTS chipset market. Our ASPs increased by 7.5% quarter-over-quarter due to product mix shift to a higher end. Demand for 7000-series convergence platform chipset increased as the market for both EV-DO and UMTS smart phones grew. QCT supports a full spectrum of low, medium and high tier smart phones with 7000-series family of chipset. We expect that stronger demand for these feature rich chipsets will continue in mature wireless markets and enable QCT to maintain flat to moderately lower weighted ASP going forward. QCT delivered record operating profit of $487 million in fiscal third…

Thank you Sanjay and good morning everyone. I will begin with a couple of matters important to our results and forward guidance. First, our fiscal third quarter results do not include any impact related to the new Nokia agreement. We have provided a preliminary estimate of the earnings per share impact of the settlement agreement upon fiscal fourth quarter, and I will add this morning a preliminary estimate for fiscal 2009. Second, we are reaffirming our guidance for strong year-over-year growth of CDMA based devices in 2008. Third, we are raising our estimates for fiscal 2008 revenue and earnings per share. The Nokia settlement agreement has increased our estimate, but it’s noteworthy that our estimates have increased even without the new agreement. Turning to our third fiscal quarter results, revenues were approximately $2.8 billion, a 19% increase year-over-year and pro-forma earnings per share were $0.55. In our QCT segment third quarter revenues increased 29% year-over-year and QCT’s operating margin was 28%. QTL earned record revenues of $803 million this quarter and we estimate approximately 107 million new CDMA devices were shipped in the March quarter, down sequentially and consistent with normal post holiday seasonality. The average selling price increased to approximately $226 per unit, reflecting stronger demand for full-featured devices as well as favorable currency impact. CDMA based infrastructure royalties were also strong during the quarter, stemming from continued network upgrades by wireless operators and a good leading indicator for the future. QTL's operating margin was 83%. QWI revenues were $190 million with an operating loss of $1 million, primarily reflecting increased mobile banking investment. Operating cash flow was approximately $739 million and pro-forma free cash flow was approximately $844 million or 31% of our revenues. During the quarter, we returned approximately $261 million of capital to our shareholders through…

Thank you, Bill. Before we go into our question-and-answer session I would like to remind our participants that our goal is to address as many questions as possible before we run out of time on the call. Please limit your questions to one per caller. Operator we are ready for questions.

(Operator Instructions). Brian Modoff with Deutsche Bank, please go ahead with your question.

Hi, congratulations on the agreement with Nokia it's good to see. Sanjay, question for you. In terms of the agreement with Nokia, do you see this perhaps engaging you with Nokia in developing or perhaps working with you in your 3G base band? And also given that you are developing CSM for LTE, could you see Nokia and NSN being engaged in working with you on that product? And then how do you see this impacting this agreement and potentially the scale that it delivers. How do you see this impacting some of your competitors in the market i.e some of the smaller vendors that lack scale and perhaps don’t have the range of customers that you have?

Brian, Steve has been more intimately involved in the discussions. I would defer to him on that, Steve do you want to take the first part of that question?

All I can say is that I think that it's been pretty clear to everybody that this dispute between QUALCOMM and Nokia has been a significant impediment to working more closely together and I think that both companies are going to look for a number of opportunities to work together now that this dispute is behind us, and we look forward to it.

This is Paul. I just wanted to add that I had a very good discussion with Olli-Pekka as we were concluding the agreement and we both agreed to get together quickly to talk about opportunities for the two companies to collaborate. It was a theme of our discussions throughout this whole process that there was a lot of respect between the two companies and we thought that we could do a lot to drive the industry together and I look forward to taking advantage of those opportunities.

Brian, just to add to that you would probably know that we already work with Nokia through an ODM relationship, based on our chipset, so I expect that we will certainly enhance that and given that a major obstacle has been removed in the path of our further engaging with them on the MTS chipset, I think we will engage in understanding if there is a possibility for the collaboration there. In terms of your second part of your question, certainly I think to the extent that larger portion of the market is not obstructed for QCT opportunity, I think that some of the folks who have had preferred positions in a number of different accounts, I think that they will view this as potentially an increase in competitive pressure for them so our skills certainly enables us to deliver better products do more R&D and stay in technology leadership and we hope to be able to use all of that to convince more customers in the marketplace to use our chipsets.

Mike Walkley with Piper Jaffray, please go ahead with your question.

Great, thank you very much and congratulations on the negotiated settlement. Bill just a little clarification on your fiscal '09 outlook of that $0.20 to $0.28. Can you let us know in terms of legal defense how much of that's included in there or say it another way how should we think about your legal defense in absolute OpEx dollars potentially declining in fiscal '09?

Mike that $0.20 to $0.28 estimate, it's obviously primarily revenue, but there is an element in there for reduced legal expense directly related to what we have been spending in the past on the Nokia matter. I think it's too early at this point to get into a discussion on total business model defense costs for 2009, but certainly the Nokia settlement agreement is a good and significant positive step.

Tim Luke with Lehman Brothers, please go ahead with your question.

Thanks so much. Bill just to clarify and congratulations on the deal obviously, perhaps still it might be good if you could provide a little context on what you think had been the catalyst for the timing associated with it. But the question that I had really for Bill was for the September quarter you guiding a midpoint of $0.10 for the full year fiscal '09 you are guiding a midpoint of 28, so could you just give us some sense of what is impacting the boost of September as opposed to sort of weighted throughout the calendar year? And at the same time could you give us some sense in the release it talks about an upfront payment from Nokia. Were you thinking that that will be something that you will be amortizing over the 15-year licensing deal or how would you treat that and is there some of that in the $0.20 to $0.28 guide? And then separately, Steve, perhaps you could talk about what you feel the implications may be for some of your other licensing deals with your other partners of this landmark settlement?

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Okay. So, Tim we don’t believe that our Nokia agreement impacts out most favorite provisions which I think is what you are getting at in our other license agreements. But I would say that if we offer the package at terms of the Nokia agreement to other licensees I would be very happy if those other licensees would accept the package of Nokia's terms and conditions and provide us with the same value that Nokia will provide us under our new agreement.

So Tim then on some of your other questions, yes there is an upfront payment as Steve said it is a very significant payment. And that payment we are determining how that will be converted into revenue and there will be an amortization schedule of that. We are still working through that Tim, hence why we have given a fairly wide range to our earnings increment from the Nokia settlement agreement; but yes there will be an amortization of the upfront payments.

Bill let me just, one of the other questions in term of the catalyst of getting this deal; let me just say we have been in discussions for a long time with Nokia and in terms of what was the catalyst -- who is to really know the fact is that the party is converged and we have now an agreement that I think we are both very happy with.

And then the last one Tim, the fourth quarter estimate versus the '09 estimate. Steve mentioned there is an upfront payment and that will be amortized. I expect the amortization to extend back in time to when payment stopped forward through to the end of 2022 and then in '09 we're looking for an increment from the resumption of royalty payments on top of the amortization. I think that gives you a good sense of why the increase in '09 versus estimate for '08, but having said that we're still at an early stage on working through this.

Tal Liani with Merrill Lynch, please go ahead with your question.

Just trying back-count the terms of the deal; in the past you gave guidance of $0.25 to $0.30 for Nokia contribution and then you said also legal expenses I think were in the neighborhood of 300 million. So if I assume that you have reduced your legal expenses by 200 of the 300 it is $0.10 plus Nokia for '09 if I take the high end of the range of $0.30 that's $0.40. Is the discount if so -- and your midpoint for '09 is $0.24; so is the discount around 40% to 50% to Nokia versus the prior expectations or what do I do in math wrong that will kind of make the calculation wrong?

Now we're limited is to what we can say given the terms of the agreement with Nokia and we certainly don't want to press on the terms that we do have. But I would just add Tal that my initial estimate on the legal expense increment of that number we gave for '09 is less than what your assumption there was. Remember that we have said its more than $300 million in terms of total business defense for fiscal '08. But we also said that the outside legal fees that we have been paying although it’s the majority of it we have indicated its more closer to the $200 million range and then the balance of that total business defense is other matters and in other areas including offsets to revenue. So, in that $200 million range of outside legal fees you have got monies we have been spending on the Nokia, trying to wrestle that one down, there has also been the Broadcom matter you have got the EC. So there are a number of areas in that $200 million or so expense and just a portion of that has been Nokia.

Tim Long with Banc of America, please go ahead with your question.

Thank you. Just two quick ones if I could first maybe Sanjay and Bill together; very strong quarter for chip ASPs yet we are guiding the overall phone asp ASP in the June quarter to be down 5% or so could you just kind of work that out for us? And then on the deal could you just give us a sense as I know you can’t give too many specifics but should we assume that there’s a lot of technologies announced here across 3G and 4G; should we assume that it’s a constant royalty rate across all technologies or could it be different by different air interface and is it the same rate that we are using for the catch up payment as we are for the ongoing rate? Thank you.

Steve, do you want to take the rate question by technology?

Yes but I am afraid we can’t comment on the royalty rates but there are as I said on going royalties for each of these technologies through the term of the agreement.

Tim, on the chip ASP versus the phone ASP, I think the key item there in that differential it’s from the time we ship the chip to the time a subscriber buys the phone, that’s our estimated inventory channel that we are try and track, it's not our inventory, it’s others inventories. But we indicated we are forecasting that there is a bleed in that total inventory channel in the September quarter, that inventory channel will reduce. And we think that one of the main regions that is driving some inventories that the channels a little over weighted on is in the developing regions. So, we expect ASPs of low end devices that cross the hurdle of revenue recognition for our royalty business to be a little bit different in terms of what’s going through that channel relative to the MSMs were shipping that are at the start of that channel cycle.

[Dona Jackson] with Goldman Sachs, please go ahead with your question.

Thank you very much. Just in terms of the 4G aspect of the agreement; can you just update us on what percentage of your 3G licensees at this point have also signed on for your OFDM technologies, and how you think that might change or accelerate based on this agreement?

Let me first say under our CDMA agreement they cover multi-mode, so as CDMA transitions and we think that will be a long time out but when OFDMA gets deployed, we think there will be lots of multi-mode devices. So those are covered under our CDMA agreements today. And so what I was talking about under the Nokia agreement is a single mode so a device that doesn’t have CDMA it has all OFDMA. And I think that with already the second Tier 1 manufacture with now the largest handset manufacturer in the world signing an agreement to pay on going royalties through the term of the agreement; that’s a significant factor that I think will likely accelerate the success of our OFDMA licensing program, and allow us to sign us other companies. I think today we now have with the inclusion of Nokia eight companies that have signed up to single mode OFDMA agreement.

Ehud Gelblum with JPMorgan, please go ahead with your question

Alright, thank you. It's absolutely amazing; great job. Bill just understanding a little bit more about the new guidance; it's down just correct me if I am wrong that the $0.07 to $0.13 that we are adding to fiscal year '08 therefore include some restatement of Q1 to Q3 some burping up of those quarters, so that the Q4, new Q4 number includes somewhat less than $0.07 to $0.13, that’s just 0.1 so that I had to understand how the mechanics of that work? And then as well on the one payment I assume that the $0.07 to $0.13 also includes some amount of that one time payment and even though it'll amortized should we assume that more of it ends up in '08 than ends up in future years or are you assuming that it sort of gets amortized evenly? And then, finally on the fundamentals, one mundane question the adjustment of the total handset shipments for 2008 that includes a higher CDMA number CDMA2000 number and a lower WCDMA number, can you give some background as to what you saw in the quarter that led you to raise CDMA2000 and lower WCDMA? Thank you.

Sure Ehud, first on the -- let's just do the handset one first. We have in our unit estimates for calendar 2008 with this although our total range is the same as last. We have increased CDMA2000 modestly and decreased WCDMA modestly. And on the WCDMA side, we are seeing replacement rates, the replacement rate extend out just marginally longer I think in the last few weeks we have all seen some announcements where operators are experiencing situation where they are being able to hold on to their customers just a bit longer in this environment, or their customers are holding onto their handsets just a bit longer, which is basically what we have expected at the outset of the year. This reflects just a minor adjustment on what the replacement rate is -- estimate is region-by-region. And then the CDMA2000 increment, we see that largely in the North American market and I think what we are seeing there is a strong upgrade cycle in to a category that I think many of us describe as smart phones. So that's what we're seeing in the handset market. We spend a lot time on this given how many different parties or organization or companies have been decreasing their forecast to wireless devices in the last few months and when we're going against the green we typically then apply even more effort to it. But after all that we're pretty pleased to see that our estimates for the CDMA technology as a whole are holding at this point. Then on the your question on the fourth quarter, yes, you are correct that $0.07 to $0.13 estimate for the fourth quarter includes a catch-up so to speak from amounts owed in the past that now as result to this settlement agreement, we expect it will be what we record in the fourth quarter. That fourth quarter amount that at this point I expect that will all be an amortization of the upfront payment, a partial amortization of the upfront payment. And as Steve said it's a very substantial upfront payment, much more than what has been owed for the past and a portion of it is a payment for the future. Okay?

Glenn Young with Citigroup, please go ahead with your question.

Thanks. This question is for Sanjay first. I wonder if you could discuss, I mean, I understand that you can't give us any details about the potential chip relationship with Nokia at this point. But to the extent one could potentially start from today, could you just walk us through a timeline of how long it would take from today, so you could actually recognize revenues for sale of chips to Nokia understanding that you do have an OEM relationship with them and obviously now some patents or technology changes how long that might take? So that’s question one. Second thing is just a question on inventories, up again a little bit in the quarter after being up last quarter just your thoughts as to what you think inventories will do next quarter? And then lastly just thinking about the bigger picture demand outlook here because you have given us some sense as to what you are seeing on ASPs some channel inventories that are building, maybe just a comment on how you see the overall demand environment for handsets?

I will take the third question about the inventory; I think we have indicated that we are changing our business model a little bit in the sense that we are taking control of inventory earlier in the cycle of chip production, so we carry a little more inventory. But we have a lot more control on how quickly we can turn them into parts and therefore our responsiveness to our customers have improved. So that’s one factor and the second factor is that you would remember that we had little shortage of parts back in the first quarter or actually in fact what we had was some more digital dye and not enough analog dye to match it and I think that is working its way through our inventory cycle. I expect our inventory next quarter will be flat to down, so and even with our current inventory I think that if you look at our revenue turns our inventory turns per year its probably industry leading. So I feel pretty comfortable about our inventory level. I think the third part of your question was handset demand forecast and I’ll turn that over to Bill.

I will give you a little color of what’s based into our forecast kind of on a region-by-region basis. China we are looking for modest our expectations are modest up tick from the prior quarter in terms of unit consumption. European market we are looking we think that the prior quarter was coming off a seasonal effect; dipped down as we expected and now we are looking for an up tick in the next quarter. In India, we see that continuing strong in terms of unit consumption, now that is a region we think that vendors have stocked up pretty high on inventory. It is a strong growth market, but nonetheless we think inventories for that region not necessary in the region but for that region are a bit overbuilt. And so our forecast is there's going to be an inventory bleed in terms of units consumed versus what goes into that chipsets going into the early stages of that channel. Japan you are coming off a very strong quarter, a seasonally strong quarter and now we look for a seasonal decrease. Korea flattish slight up tick perhaps mobile replacement market and then North America, coming of a seasonal down quarter as expected and we are looking for some up tick there. And then the last area that I would say is just kind of rest of the world where we are still seeing a fair amount of 3G handsets being sold on to 2G networks. And we have seen strong and steady growth in all other areas; we just call rest of the world. So that’s how we describe that. Then Sanjay another question was that design-ins interval?

Yeah thinking about the design without reference to Nokia specifically if I answer the designing interval in general here, there are two possible ways to get design-ins usually at the new account, either through ODMs or directly with the design team at new prospective account typically we have long standing relationships with ODM partners who have great deal of experience in our chipset and they can deliver products faster then bringing up a new team on a brand new platform. So if we look I think that if we were to engage in ODM relationships with a new customer, revenues could be recognized in 2010 fiscal 2010 at the earliest, I believe.

(Operator Instructions). Mark Mckechnie with American Technology, please go ahead with your question.

Great, thank you and congrats on the settlement, it sounds like good deal for both. I wanted to ask a question here for Steve on pass through rights and specifically does QUALCOMM actually get pass through rights on some of the Nokia GSM patents for your customers? I'm really just trying to figure out is would LG or Samsung or an Apple if they use your chips be free from Nokia IP issues by using the QUALCOMM chips? Thank you.

We did not get pass through rights, but we did get assignment of the significant number of patents which we would be able to offer as licenses to our customers. So companies that buy chips from us similar to buying chips from other companies would -- to the extent they use Nokia IP would negotiate with Nokia, the terms of a license agreement to those companies. However, Nokia did agree to cap what royalties they would charge for customers that are using our chips in a fashion that I'm very comfortable with.

And may be I'll add just a little more to that, I believe that we have a position through some of agreements that are already in place, to pass more rights to our customers than we believe anybody else in the industry Mark. So I think that we're already in a good position to pass through rights to our customers.

James Faucette with Pacific Crest, please go ahead with your question.

Thank you very much. Most of my questions have been answered, but I actually just want to follow-up on Mark's question. If you didn't get full pass through rights in the agreement with Nokia, at the very least do you have broad access to their IP portfolio for incorporation into your chipsets and products in the future? That's my first question and second question is probably for Bill; you mentioned a little bit you'd seen a little bit of an extending of the replacement cycle particularly for WCDMA. I would assume that has happened primarily in Europe, can you talk to if that's in fact the case and if you've seen extending of replacement cycles in any other geographies? Thank you very much.

In answering the first question, yes, the answer is yes. We have full access to all their patents to be able to incorporate all their patented technology into our chips.

James, then on the replacement we've anticipated an extension on that replacement cycle from the outset of the year. We think 2007 is around 47% rate and we think 2008 will end up at about 43% rate. And so we're looking at that extension broadly across many geographies. In this case our updated guidance for unit shipments of all CDMA technologies in 2008, we saw that cycle just widen a bit more than what we had previously expected. And you are correct that was in Europe in the WCDMA, yes.

Kulbinder Garcha with credit Suisse, please go ahead with your question.

Thanks and just a couple of clarification. First of all on the pass through rights, was my understanding correct Steve that it sounds like Nokia would be able to cross buy some of your own license fees and what does that mean for the cumulative industry royalty rate for WCDMA? I think there has been some concerns many years on this and what confidence can you give us outbound costs if the litigation is years down the road? That's my first question and my second question is for Bill, I won't go back to the guidance. As I understand and tell me if I am wrong the $0.07 to $0.13 EPS guidance or impact from Nokia kind of assumes an accelerated impact that won't be there on an ongoing basis in 2009. Is my understanding right?

Okay, on the first question is it's basically a royalty stacking question and my experience has been, and I believe it will continue to be this way is that royalty stacking in CDMA and WCDMA has been really a myth. We have a substantial pass through rights from many companies as Sanjay was saying, and those will obviously continue to exist. When you think about Nokia and their licensing program, they are going to -- to the extent they want to establish a licensing program and collect royalties; negotiating with companies like Samsung and Motorola and LG, these are other also companies that have substantial patent portfolios, significant patents as well. And so when you look at Nokia's business their business is primarily a handset business and they are not they don’t drive the same kind of value that we drive on with respect to IPR and royalties. So I think it will be typical in this industry for these large handset manufacturers to do royalty-free cross-licenses and so I kind of suspect that’s what will continue to occur and so many of our important and large customers and our important and small customers won't have the kind of royalty stacking issues that you referred to. In addition as I said, when they use our chips, they've agreed to cap the royalties they would charge at levels that I think our customers to the extent they do have to pay will be able to compete quite well.

On the question on the acceleration point, so let me just backup again on that. I think we all recall that Nokia stopped paying QUALCOMM royalties after the first week of April 2007, and this settlement agreement, in this settlement agreement both parties have agreed the amount that covers both the past and defines the rate for the future. And as we pointed out there is a significant upfront payment and I indicated, I expect we will amortize that payment from over that entire cycle from April 2007 through the end of 2022 and then there is a resumption of royalty payment on top of that. So again what we expect to record in this fourth quarter fiscal quarter of 2008 will be a payment that reflects due consideration for the use of our IP from April 2007 through the fourth quarter of fiscal 2008. And then next year there will be an amortization and a resumption of payments as well.

Richard Windsor with Nomura, please go ahead with your question.

Alright, thanks very much. I wonder if you could talk a little bit about obviously it would appear that Nokia has got some kind of discount and that you are making up that value by getting some or they have assigned to you some of their patents. I was just wondering seeing as any way you could really get value from those patents would be charge higher royalties to your customers. How you actually and seeing as you charge a flat rate for all your patents, how you are going to derive value from the patents that they have actually assigned to you to make up the balance of value?

Well, I am not going to go in to much detail on that. I think we received some valuable patents in a number of areas including some areas that we haven’t licensed today such as GSM. But in terms of how we derive additional value from those patents, I am not at this point ready to give much detail on that.

This is Don, I would add that there's lots of ways that one derives value from patents. Patents as you indicated from offensive perspective or licensing perspective there is also a defensive value to patents as well. So there is a lot's of value to good patent portfolio.

Brett Simpson with Arete, please go ahead with your question.

Thanks very much. I have a couple of questions for Sanjay. First up, maybe on USB modems and data cards. I guess some of your customers are seeing some significant growth guys like Huawei and ZTE and Unipeir. And can you give us maybe a sense for the size of the business that you have in this space and what sort of growth outlook you see as markets like China and Russia and Brazil start to launch services over the next 12 months? And maybe just a follow-up; you made acquisition in Bluetooth and WiFi a few years back and we have not seen product as yet, can you maybe just give us an update us to where you are and when you expect to start booking revenues for connectivity? Thanks.

Brett on the USB modem and data card side, indeed we are seeing pretty significant growth and in fact that’s one of the places where our customers like Novotel, Sierra and Option, Huawei and others have done extremely well in driving marketplace both in terms of driving sales for us, but also for the carriers driving data ARPU and data revenue. We see continued growth in that and as you know while the USB modem data card business is very strong, with the Gobi initiative we are enabling embedded modules and the prices there -- we have with our business model driving the prices to a place where we see more and more laptops being embedded with these modules. So that is an important marketplace for broadband wireless data. With respect to your second question about Bluetooth and WiFi we are already in Bluetooth booking revenue for Bluetooth shipments, our shipments per quarter is already in multiple million unit. In Bluetooth in fact I think we are doing extremely well in Bluetooth. In WiFi, we have had some challenges as I have shared with you in different forums, and we are now focused on integrating WiFi cores into our higher end chipset, that’s become the strategy as opposed to a focus exclusively on the laptop marketplace, a market which has been very competitive and has been served very well by number of other partners. We see the largest growth of WiFi now being driven by handsets and smart phones and that is our focus in WiFi.

Maynard Um with UBS, please go ahead with your question.

Hi, thanks. Just looking at your fairly strong MSM guidance, can you just help us balance that with the macro-economy with your guidance and also how that balances with your comments that handset channel inventories will come down next quarter? And a quick one for Steve, anything here that helps you in the Broadcom or EC cases? And lastly Bill just wondering why you are amortizing the catch-up payments from the prior quarters? Thanks.

I will take a couple there, Maynard, in terms of the amortization we are going to be booking a fairly significant deferred asset and then it's how you -- what’s the appropriate way to bring that deferred asset onto the P&L. So, at this point we've concluded that the best means is an amortization that I don't think we're going to need an ongoing information flow from Nokia to bring that asset on to the P&L. It's a very extensive settlement agreement, there is a number of value facets to it and all things combined it just seems like the appropriate way to do it and we're still working through an amortization schedule before we conclude that. And your point about the strong MSM guidance versus the macro environment and first I would just add, I would say that in terms of the macro environment again, we're probably going to bid against the tide that what many people or parties or organizations have been saying in the last couple of months in terms of how they see their view of the total wireless market or their view of their position in that wireless market. I think what's clear here is that CDMA technologies are progressing very well this year and there are some of the older technologies that are starting to drop-off. So I think that's one aspect of it and then the other one is we serve the entire world with CDMA technologies [Sanjay’s] business is in the chipsets and, we sell where others might be more regionally focused or products that are more segment focused in one segment or another we're worldwide and I think QCT has got the broadest chipset portfolio of any supplier into this 3G market. So, I think when it comes down to how well the 3G is doing in this market relative to the older 3G variations number one and number two we're broadly diversified and benefits I think are showing through.

On the Broadcom question, maybe Don that would be a good one for you to respond to?

Yes, was the question on how does this impact or does it affect the Broadcom situation?

Right.

The answer is it's really not related to Broadcom, we obviously have some ongoing disputes with Broadcom as well, and those are separate and distinct from any disputes we've had with Nokia.

We've reached the end of the allotted time for questions today. Dr. Jacobs, do you have any closing remarks.

Just wanted to thank everybody for joining us this morning and we certainly appreciate your flexibility with last minute changes, but hopefully you thought it was worthwhile. Obviously, we are extremely pleased to put the dispute with Nokia behind us and really feel like the company has found a way to a win-win scenario, and so we are all looking forward to a closer collaboration between the companies. And I think that will really help drive the wireless industry forward and I am certainly happy to avoid an escalation which would definitely have been detrimental to the entire industry and I just want to thank our team that worked on this again for just a great effort. Obviously, over this period, the questions and concerns about Nokia have often overshadowed the performance of the company and I just want to highlight again that through this period our employees and our partners continue to execute extremely well and I am very happy to see that. As we put this behind us, it's really going to allow us to allocate our resources in an even more focused fashion to address the opportunities that are created by the growth of 3G and as we look out to other advanced wireless technologies. On a personal level, I have to say I am excited to be able to spend more of my time and attention on some of the great new technologies that we are working on and great products and also to work more closely with our partners including Nokia, but also a lot of others in consumer products and computing space the content areas. So just tremendous amount of opportunity ahead of us, we are excited to be in the position that we are in we look forward to continuing to deliver great results to you. Thanks a lot.

Ladies and gentlemen this does conclude today's conference call you may now disconnect your line.