Qualcomm Raises Financial Guidance for the Second Fiscal Quarter of 2010

SAN DIEGO, March 25 /PRNewswire-FirstCall/ -- 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™ (MSM™) 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® company.  For more information, please visit www.qualcomm.com

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™  network and FLO™ technology; the development and commercial acceptance of the mirasol® 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.

    
    
               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