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Qualcomm Announces Third Quarter Fiscal 2011 Results(Targeted News Service Via Acquire Media NewsEdge) SAN DIEGO, July 20 -- Qualcomm issued the following news release: Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the third quarter of fiscal 2011 ended June 26, 2011. "Qualcomm delivered strong year-over-year results again this quarter as our business performed well across all key guidance metrics. In addition, we successfully completed the acquisition of Atheros, positioning us to further expand our opportunities going forward," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "Looking forward, we continue to see healthy growth in CDMA-based device shipments of approximately 18 percent in calendar year 2011, and we are pleased to be raising our revenue and Non-GAAP earnings guidance for the fiscal year, driven primarily by strong global smartphone adoption and the addition of Atheros." Third Quarter Results (GAAP) * Revenues: 1 * Operating income: 1 $1.11 billion, up 25 percent y-o-y and down 22 percent sequentially. $3.62 billion, up 34 percent year-over-year (y-o-y) and down 6 percent sequentially. * Net income: 2 * Diluted earnings per share: 2 $0.61, up 30 percent y-o-y and 3 percent sequentially. $1.04 billion, up 35 percent y-o-y and 4 percent sequentially. * Effective tax rate: 1 23 percent for the quarter. * Operating cash flow: $1.26 billion, up 33 percent y-o-y; 35 percent of revenues. * Return of capital to stockholders: $360 million, or $0.215 per share, of cash dividends paid. Non-GAAP Third Quarter Results Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain share-based compensation, certain tax items that are not related to the current year and certain acquisition-related items. Starting with acquisitions completed in the third quarter of fiscal 2011, we changed our methodology for reporting Non-GAAP results to exclude the recognition of the step-up of inventories to fair value and amortization of certain intangible assets, in addition to our historical practice of excluding acquired in-process research and development (R&D) expense. Third quarter of fiscal 2011 Non-GAAP results excluded $45 million related to the step-up of inventories to fair value and $32 million in amortization of intangible assets that resulted from the acquisition of Atheros Communications, Inc. (Atheros). * Revenues: $3.62 billion, up 34 percent y-o-y and down 6 percent sequentially. * Operating income: $1.39 billion, up 41 percent y-o-y and down 16 percent sequentially. * Net income: $1.24 billion, up 32 percent y-o-y and down 14 percent sequentially. * Diluted earnings per share: $0.73, up 28 percent y-o-y and down 15 percent sequentially. The current quarter excludes $0.01 earnings per share attributable to the QSI segment, $0.09 loss per share attributable to certain share-based compensation and $0.04 loss per share attributable to acquisition-related items. * Effective tax rate: 21 percent for the quarter. * Free cash flow: $1.16 billion, up 22 percent y-o-y; 32 percent of revenues (defined as net cash from operating activities less capital expenditures). Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included at the end of this news release. In the comparisons summarized above for the third quarter of fiscal 2011, the following should be noted: results for the second quarter of fiscal 2011 included $401 million in revenues related to prior quarters as a result of agreements entered into with two licensees to settle disputes and $120 million in impairment charges related to our Firethorn division, including $114 million in goodwill impairment. Third Quarter Key Business Metrics * CDMA-based Mobile Station ModemTM (MSMTM) shipments: 120 million units, up 17 percent y-o-y and 2 percent sequentially. * March quarter total reported device sales: approximately $36.4 billion, up 44 percent y-o-y and down 9 percent sequentially. o March quarter estimated CDMA-based device shipments: approximately 170 to 174 million units, at an estimated average selling price of approximately $209 to $215 per unit. Cash and Marketable Securities Our cash, cash equivalents and marketable securities totaled $20.2 billion at the end of the third quarter of fiscal 2011, compared to $22.1 billion at the end of the second quarter of fiscal 2011 and $17.6 billion a year ago. Upon the close of the Atheros acquisition on May 24, 2011, we paid $3.1 billion in cash, net of the cash acquired. On July 13, 2011, we announced a cash dividend of $0.215 per share payable on September 23, 2011 to stockholders of record as of August 26, 2011. Research and Development View chart at http://files.shareholder.com/downloads/QCOM/992946673x6184273x484612/5750523e-4022-4074-adab-4a5d6b80762b/QCOM_Q311ERFinal.pdf. Non-GAAP selling, general and administrative (SG&A) expenses increased 14 percent y-o-y primarily due to an increase in employee-related costs. QSI SG&A expenses for the third quarter of fiscal 2010 included a $62 million gain on the sale of our Australia spectrum license. Effective Income Tax Rate Our fiscal 2011 effective income tax rates are estimated to be 20 percent for GAAP and 21 percent for Non-GAAP. Our fiscal 2011 estimated GAAP tax rate increased from our prior estimate of 17 percent primarily as a result of the reclassification of tax benefits to discontinued operations and lower foreign earnings related to the step-up of acquired Atheros assets to fair value. The third quarter GAAP tax rate of 23 percent was a result of this increase in the estimated annual effective tax rate. During the fourth quarter of fiscal 2011, we reached agreement with the California Franchise Tax Board on a component of our fiscal 2006 through 2010 tax returns. As a result of this agreement, we expect to record a $44 million tax benefit that will be excluded from our fourth quarter fiscal 2011 Non-GAAP results. This estimated benefit, which is included in our guidance, will reduce our fiscal 2011 estimated GAAP tax rate from 20 percent to 19 percent. Qualcomm Strategic Initiatives The QSI segment makes strategic investments in early-stage and other companies and in wireless spectrum, such as the Broadband Wireless Access spectrum won in the India auction. QSI also includes the discontinued operations of our FLO TV subsidiary. GAAP results for the third quarter of fiscal 2011 included $0.01 earnings per share for the QSI segment. During the third quarter of fiscal 2011, in connection with the presentation of the FLO TV business as discontinued operations and the requirement to compute the tax effect of discontinued operations on a discrete basis, we recorded a tax benefit of $43 million for tax benefits related to losses incurred in the first and second quarter of fiscal 2011 that were previously included in the calculation of the estimated annual effective tax rate. Business Outlook The following statements are forward looking and actual results may differ materially. The "Note Regarding Forward-Looking Statements" at the end of this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks. Our outlook does not include provisions for future asset impairments or for pending legal matters, other than future legal amounts that are probable and estimable. Further, due to their nature, certain income and expense items, such as realized investment gains or losses, or gains and losses on certain derivative instruments, cannot be accurately forecast. Accordingly, we only include such items in our business outlook to the extent they are reasonably certain; however, actual results may vary materially from the business outlook. The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook. The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein. TNS ss71 110721-mv-3496973 (c) 2011 Targeted News Service |