This summary is based on the first quarter fiscal 2009 earnings call conducted by Qualcomm Inc. (QCOM) on January 28, 2009.
Management:
CEO: Dr. Paul Jacobs
EVP and CFO: William Keitel
EVP: Steve Mollenkopf
VP, IR: John Gilbert
Key Investor Issues:
- Q1 GAAP EPS of 20 cents were down 57% year-over-year and 62% sequentially.
- Q1 total dividends were $264 million or 16 cents per share.
- Full year pro forma revenues are forecast to be between $9.3 billion and $9.8 billion.
First Quarter Financial Highlights:
Q1 revenues were at the high end of the prior guidance and up 3% year-over-year.
- The pro forma operating income exceeded the prior guidance and firmed 4% year-over-year.
- The record operating cash flow included the $2.5 billion payment from Nokia.
- The pro forma operating expenses were approximately 7% lower than the fourth quarter, significantly lower than the guidance of 1% growth.
As of January 23, the company had returned approximately $9.8 billion of capital to shareholders since fiscal 2003.
- The company continues to pay cash dividends and is active in share repurchase programs.
- The management recently announced another quarterly cash dividend payable on March 27 of this year.
In QCT, the CDMA channel inventory has begun its contraction as expected.
- In QCT’s MSM, shipments for the quarter were in line with the prior guidance.
- The reduced visibility in the marketplace makes forecasting future inventory levels extremely challenging.
The management continues investing in key initiative such as HSPA Plus and LTE.
- These are expected to drive short future growth and strengthen the competitive position moving forward.
- HSPA Plus is a natural evolution path for HSPA.
- HSPA Plus momentum continues as several operators have announced their plans for market launches in the first half of 2009.
- LTE, an OFDMA technology that is able to support higher data rates and more users by taking advantage of wider amounts of spectrum being planned by some operators looking to leverage new spectrum.
- OFDMA represents one of the company’s largest research and development efforts and remains on schedule to sample our multimode LTE chipsets in the second quarter of 2009.
- While the management continues to estimate healthy growth in the CDMA device market, it has lowered expectations for 2009.
Despite the current market and economic volatility, the worldwide market for 3G remains vibrant.
- This is because of an extensive range of competitively priced devices and services to choose from.
- According to the CDG and the GSA there are more than 525 CDMA based 3G networks that have been launched as of January, 2009.
- There are now more than 65 HSUPA networks and over 55 EVDO revision A networks commercially launched.
- Over the last year, the total number of HSDPA devices introduced into the market more than doubled to over 1,000.
- 3G subscribers grew more than 25% year-over-year according to wireless intelligent.
- As of December, there were 735 million 3G subscribers as the global migration from 2G to 3G technologies continued.
- Although total handset market grew only 6% year-over-year, CDMA based handset shipments grew 17% year-over-year compared with just 1% growth for GSM.
- In Western Europe, wireless intelligent reported that as of December end, WCDMA subscribers increased 75% year-over-year versus a 9% year-over-year decline in GSM subscribers.
Concerning FLO TV, the management opposed the delay of the February 17 DTV transition date which was set by the US government three years ago.
- Since then tremendous efforts have been made to make Americans aware of the transition date.
- The company has invested hundreds of millions of dollars including over $550 million acquiring spectrum in the FCC’s 700 megahertz auction last year.
- This was meant to extend the innovative FLO TV service and to build out the network.
As part of the long-term partnership with China Qualcomm, the management will continue to support the growth of Chinese companies and the development of 3G CDMA networks, devices and applications.
- The company currently has license agreements with more than 30 companies based in China including 10 new agreements executed over the past 12 months.
- The management looks forward to the largest wireless market in the world having access to multiple 3G CDMA technologies.
- These technologies are expected to drive a dynamic and competitive environment benefitting consumers, manufacturers and operators.
QCT’s business highlights first quarter 2009.
