This summary is based on the second quarter fiscal 2008 earnings call conducted by Qualcomm Incorporated (QCOM) on April 23, 2008.
Management:
Vice President Investor Relations: John Gilbert
Chief Executive Officer: Paul E. Jacobs Ph.D.
President: Steven R. Altman J.D.
Chief Operating Officer: Sanjay K. Jha Ph.D.
Chief Financial Officer: William E. Keitel
Executive Vice President: Don J. Rosenberg
Key Investors Issues
- EPS were 47 cents a share compared to 43 cents a share last year.
- Net income rose to $766 million, from $726 million in the same period a year ago.
- Revenue rose 17% to $2.61 billion.
Second Quarter Highlights
Year-over-year revenues increased 17%, operating income increased 9% and pro forma earnings per share increased 8%.
- QCT’s revenues increased 29% year-over-year to more than $1.6 billion.
- The company shipped 85 million MSM units for a 39% increase year-over-year. QCT’s operating margin was a healthy 26%.
QTL earned revenues of $795 million this quarter and the company estimates approximately 112 million new CDMA devices were shipped with an average selling price of approximately $222 per unit.
- QTL’s operating margin increased to 86%. Operating cash flow was approximately $950 million. Pro forma free cash flow was $775 million or 30% of revenues.
- The company returned approximately $1.2 billion of capital to shareholders, including $455 million of cash dividends and $769 million to repurchase more than 20 million shares of common stock.
- Cash and marketable securities now total $10.6 billion with $6.3 billion offshore and $4.3 billion domestic. Pro forma estimated tax rate for fiscal 2008 is now 20% compared to prior estimate of 21%, reflecting estimate of additional foreign earnings taxed at a lower rate for the fiscal year.
Data from the CDMA development group and the GSM association indicates that more than 465 CDMA-based 3G networks have been launched as of April 2008.
- This includes more than 95 operators deploying the higher speeds of 1XEV-DO, including over 30 operators that have deployed EV-DO Revision A. In addition, more than 180 operators have launched high-speed HSDPA networks and more than 30 operators have deployed HSUPA.
- According to Wireless Intelligence worldwide 3G subscribers grew to approximately 625 million as of March 2008, an increase of approximately 36% from the year ago quarter. By 2012 3G subscribers are forecasted to grow to 1.6 billion, representing an exciting opportunity ahead for partners in that.
- According to strategy analytics CDMA-based handset shipments continue to outpace the competition as they grew 26% year-over-year compared to only 12% year-over-year growth across all technologies.
In the United States the company continues to see operators generate revenues from their 3G data services.
Recently Verizon noted that their average data revenue per user in the fourth quarter of 2007 increased 36% year-over-year and that approximately 74% of their retail customers are data users. AT&T commented on its earning call yesterday that wireless data grew 57% year-over-year and that data now represents 21.5% of total wireless service revenue. Sprint’s fourth quarter data on the first phase CDMA-base increased 21% from the year ago quarter.
In Europe, based on estimated device shipments for the quarter ending December 2007, WCDMA shipments increased approximately 70% year-over-year.
According to Wireless Intelligence at the end of March, WCDMA subscribers in Western Europe increased 98% year-over-year compared to a 2% decline year-over-year in GSM subscribers. In addition, this past March Vodafone noted that subscriber data consumption jumped four-fold in the past 12 months and increases in mobile broadband usage are supported by over 100 HSPA networks across Europe, including more than 20 commercial HSUPA networks.
In Japan strong migration to 3G continued and as of January 2008, for the first time, there were no longer any shipments of 2G phones.
As of March, 3G CDMA subscribers in Japan represent approximately 85% of the total cellular population.
South Korea continues to deliver robust growth as estimated device sales for the December quarter increased 24% year-over-year.
In April LGT launched its nation-wide EV-DO Revision A service under the brand name Oz. Oz allows users to browse full web pages, upbring a PC-like user interface that’s a high resolution and wide screen for a full mobile Inernet experience. In addition HSDPA subscribers continue to grow rapidly and now represent over 20% of the 44 million Korean mobile subscribers.
