Qualcomm Raises Financial Guidance For The Second Fiscal Quarter Of 2010

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26th March 2010, 03:21am - Views: 1075






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MEDIA RELEASE PR38910



Qualcomm Raises Financial Guidance for the Second Fiscal Quarter of 2010


SAN DIEGO, Mar. 25 /PRNewswire-AsiaNet/ --


    Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator

of advanced wireless technologies, products and services, today updated its

financial guidance for the second fiscal quarter ending March 28, 2010.


    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.


    "We are very pleased with our stronger than expected performance this

quarter with both the licensing and chipset businesses projecting higher

revenues versus our prior guidance," said Dr. Paul E. Jacobs, chairman and

CEO of Qualcomm. "We now project earnings per share to be well above the high

end of our prior guidance driven by strength in licensing revenues and

favorable volume and product mix in our chipset business."


    Pro Forma Defined

    Pro forma results and guidance exclude the Qualcomm Strategic Initiatives

(QSI) segment, certain share-based compensation, certain tax items that are

not related to the current year and acquired in-process research and

development (R&D) expense.


    Second Fiscal Quarter Business Outlook Highlights

    The following estimates are based on the current business outlook:


    - Revenues: estimated to be $2.55 to $2.65 billion compared to

      our prior guidance range of $2.40 to $2.60 billion.

    - Diluted earnings per share: estimated to be $0.56 to $0.58 pro

      forma, compared to our prior guidance range of $0.49 to $0.53; and

      estimated to be $0.42 to $0.44 in accordance with generally accepted

      accounting principles (GAAP), compared to our prior guidance range of

      $0.35 to $0.39.

    - CDMA-based Mobile Station Modem(TM) (MSM(TM)) shipments:

      estimated to be approximately 92 to 93 million units compared to our

      prior guidance range of 88 to 92 million units.


    We are not updating or reaffirming our prior estimates of licensee

shipment volumes or average selling prices for CDMA devices in the fourth

quarter of 2009, as we have not completed the analysis of all the information

necessary to update this guidance. In addition, given changing market

dynamics, we are evaluating changes to the information we provide to help

investors evaluate Qualcomm's licensing business.


    The following table summarizes GAAP and pro forma guidance for the second

fiscal quarter of 2010 based on the current business outlook. The pro forma

business outlook provided below is presented consistent with the presentation

of pro forma results elsewhere herein.


    The following estimates are approximations and are based on the current

business outlook:



                          Qualcomm's Business Outlook Summary

    --------------------------------------------------------------------------

    SECOND FISCAL QUARTER

    --------------------------------------------------------------------------

                                                                  Current

                                                                 Guidance

                         Q2 FY09        Prior Guidance            Q2 FY10

                       Results (2)     Q2 FY10 Estimates         Estimates

    --------------------------------------------------------------------------

     Pro Forma

     Revenues            $2.45B           $2.40B - $2.60B     $2.55B - $2.65B

       Year-over-                decrease 2% -increase 6%    increase 4% - 8%

        year change                                      

     Diluted earnings 

      Per share (EPS)    ($0.03)            $0.49 - $0.53       $0.56 - $0.58

       Year-over-

        year change                                   N/M                 N/M

    

    --------------------------------------------------------------------------

    

     GAAP

     Revenues            $2.46B           $2.40B - $2.60B     $2.55B - $2.65B

       Year-over-                decrease 2% -increase 6%    increase 4% - 8%

        year change                                  

     Diluted EPS         ($0.18)            $0.35 - $0.39       $0.42 - $0.44

       Year-over-

        year change                                   N/M                 N/M

     Diluted EPS

      attributable

      to QSI             ($0.03)                   ($0.05)             ($0.05)

     Diluted EPS

      attributable

      to share-

      based

      compensation       ($0.09)                   ($0.07)             ($0.07)

     Diluted EPS

      attributable

      to certain

      tax items (3)      ($0.02)                   ($0.02)             ($0.02)

     Diluted EPS

      attributable

      to in-

      process R&D         $0.00                       N/A                 N/A

    --------------------------------------------------------------------------

    

     Metrics

                                                           

     MSM shipments  approx. 69M         approx. 88M - 92M   approx. 92M - 93M

     CDMA/WCDMA

      devices           

      shipped (1) approx. 128M*      approx. 144M - 149M*         not updated

     CDMA/WCDMA

      device

      wholesale

      average

      selling price     

      (1)         approx. $201*             approx. $179*         not updated

     *Shipments in

      December

      quarter,

      reported in

      March quarter

    --------------------------------------------------------------------------

    (1) CDMA/WCDMA device shipments and average selling prices are based on 

        estimated worldwide device shipments and licensee selling prices, 

        including shipments and selling prices not reported to Qualcomm.

    

    (2) The second quarter of fiscal 2009 results included a $748 million 

        charge related to a litigation settlement and patent agreement with 

        Broadcom Corporation.

    

    (3) The estimate of our fiscal 2010 GAAP effective tax rate includes tax 

        expense of approximately $130 million for the year that arises because

        deferred revenue related to the 2008 license and settlement agreements

        with Nokia is taxable in fiscal 2010 but the resulting deferred tax 

        asset will reverse in future years when our state tax rate will be 

        lower as a result of California tax legislation enacted in 2009.

    

    Sums may not equal totals due to rounding.

    N/A - Not Applicable

    N/M - Not Meaningful



    Our outlook does not include provisions for the consequences of

injunctions, damages, or fines related to any pending legal matters unless

awarded or imposed by a court, governmental entity or other regulatory body.

In addition, due to their nature, certain income and expense items, such as

realized investment gains or losses, gains and losses on certain derivative

instruments or asset impairments, cannot be accurately forecast. While we do

not forecast impairments, we have temporary unrealized losses on marketable

securities that could be recognized as other-than-temporary losses in future

periods if financial conditions affecting those securities do not improve.


    Accordingly, we exclude forecasts of such items from our business

outlook, and actual results may vary materially from the business outlook if

we incur any such income or expense items.


    Qualcomm Incorporated (Nasdaq: QCOM) is a leader in developing and

delivering innovative digital wireless communications products and services

based on CDMA and other advanced technologies. Headquartered in San Diego,

Calif., Qualcomm is included in the S&P 100 Index, the S&P 500 Index and is a

2009 FORTUNE 500(R) company. For more information, please visit



    Note Regarding Use of Non-GAAP Financial Measures

    The Company presents pro forma financial information that is used by

management (i) to evaluate, assess and benchmark the Company's operating

results on a consistent and comparable basis; (ii) to measure the performance

and efficiency of the Company's ongoing core operating businesses, including

the Qualcomm CDMA Technologies, Qualcomm Technology Licensing and Qualcomm

Wireless & Internet segments; and (iii) to compare the performance and

efficiency of these segments against each other and against competitors

outside the Company. Pro forma measurements of the following financial data

are used by the Company's management: revenues, R&D expenses, SG&A expenses,

total operating expenses, operating income (loss), net investment income

(loss), income (loss) before income taxes, effective tax rate, net income

(loss), diluted earnings (loss) per share, operating cash flow and free cash

flow. Management is able to assess what it believes is a more meaningful and

comparable set of financial performance measures for the Company and its

business segments by using pro forma information. As a result, management

compensation decisions and the review of executive compensation by the

Compensation Committee of the Board of Directors focus primarily on pro forma

financial measures applicable to the Company and its business segments.


    Pro forma information used by management excludes the QSI segment,

certain share-based compensation, certain tax items and acquired in-process

R&D. The QSI segment is excluded because the Company expects to exit its

strategic investments at various times, and the effects of fluctuations in

the value of such investments are viewed by management as unrelated to the

Company's operational performance. Share-based compensation, other than

amounts related to share-based awards granted under a bonus program that may

result in the issuance of unrestricted shares of the Company's common stock,

is excluded because management views such share-based compensation as

unrelated to the Company's operational performance. Moreover, it is generally

not an expense that requires or will require cash payment by the Company.

Further, share-based compensation related to stock options is affected by

factors that are subject to change, including the Company's stock price,

stock market volatility, expected option life, risk-free interest rates and

expected dividend payouts in future years. Certain tax items that were

recorded in reported earnings in each fiscal year presented, but were

unrelated to the fiscal year in which they were recorded, are excluded in

order to provide a clearer understanding of the Company's ongoing pro forma

tax rate and after tax earnings. Acquired in-process R&D is excluded because

such expense is viewed by management as unrelated to the operating activities

of the Company's ongoing core businesses.


    The non-GAAP pro forma financial information presented herein should be

considered in addition to, not as a substitute for, or superior to, financial

measures calculated in accordance with GAAP. In addition, "pro forma" is not

a term defined by GAAP, and, as a result, the Company's measure of pro forma

results might be different than similarly titled measures used by other

companies. Reconciliations between GAAP results and pro forma results are

presented herein.


    Note Regarding Forward-Looking Statements

    In addition to the historical information contained herein, this news

release contains forward-looking statements that are subject to risks and

uncertainties. Actual results may differ substantially from those referred to

herein due to a number of factors, including but not limited to risks

associated with: the rate of deployment and adoption of our technologies in

wireless networks and of wireless communications, equipment and services,

including CDMA2000 1X, 1xEV-DO, WCDMA, HSPA, TD-SCDMA and OFDMA both

domestically and internationally; the current uncertainty of global economic

conditions and its potential impact on demand for our products, services or

applications and the value of our marketable securities; attacks on our

business model, including results of current and future litigation and

arbitration proceedings, as well as actions of governmental or

quasi-governmental bodies, and the costs we incur in connection therewith,

including potentially damaged relationships with customers and operators who

may be impacted by the results of these proceedings; our dependence on major

customers and licensees; our dependence on third-party manufacturers and

suppliers; our ability to maintain and improve operational efficiencies and

profitability; the development, deployment and commercial acceptance of the

FLO TV(TM) network and FLO(TM) technology; the development and commercial

acceptance of the mirasol(R) display technology; foreign currency

fluctuations; strategic investments and transactions we have or may pursue;

as well as the other risks detailed from time-to-time in our SEC reports

including the report on Form 10-K for the year ended September 27, 2009, and

most recent Form 10-Q. The Company undertakes no obligation to publicly

update any forward-looking statement or risk factor, whether as a result of

new information, future events or otherwise.


    Qualcomm is a registered trademark of Qualcomm Incorporated. FLO TV and

FLO are trademarks of Qualcomm Incorporated. mirasol is a registered

trademark of Qualcomm MEMS Technologies, Inc. CDMA2000 is a registered

trademark of the Telecommunications Industry Association (TIA USA). All other

trademarks are the property of their respective owners.


    Qualcomm Contact:

    Warren Kneeshaw

    Phone: 1-858-658-4813

Business Finance Qualcomm Incorporated 3 image

    e-mail: ir@qualcomm.com



               Reconciliation of Non-GAAP Financial Measure Related to

                                    Prior Period

    

                        (In millions, except per share data)

    

    Second Quarter - Fiscal Year 2009

    -------------------------------------------------------------------------

                                                                

                              Share-Based             In-Process     

    Segments     Pro Forma  Compensation(1) Tax Items    R&D     QSI (2) GAAP

    -------------------------------------------------------------------------

    Revenues       $2,447         $-            $-        $-       $8  $2,455

    -------------------------------------------------------------------------

    EBT               147       (140)            -        (6)    (102)   (101)

    -------------------------------------------------------------------------

    Net (loss)

     income           (46)      (145)          (36)       (6)     (56)   (289)

    -------------------------------------------------------------------------

    Diluted EPS    $(0.03)    $(0.09)       $(0.02)       $-   $(0.03) $(0.18)

    -------------------------------------------------------------------------

    Diluted shares

     used           1,651      1,651         1,651     1,651    1,651   1,651

    -------------------------------------------------------------------------

    

    (1) Certain share-based compensation is included in operating expenses as 

        part of employee-related costs but is not allocated to the Company's 

        segments as such costs are not considered relevant by management in 

        evaluating segment performance.

    

    (2) At fiscal year-end, the sum of the quarterly tax provisions for each 

        column, including QSI, equals the annual tax provisions for each 

        column computed in accordance with GAAP.  In interim quarters, the tax

        provision for the QSI operating segment is computed by subtracting the

        pro forma tax provision, the tax items column and the tax provision 

        related to share-based compensation from the GAAP tax provision.


    Sums may not equal totals due to rounding.


SOURCE  Qualcomm Incorporated


    CONTACT: Warren Kneeshaw of Qualcomm Incorporated, 

             +1-858-658-4813,

             ir@qualcomm.com



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