Qualcomm Inc (QCOM)

[khemara_qc]

QUALCOMM Updates Financial Guidance for the First Fiscal Quarter of 2005 Ending December 26, 2004
Tuesday December 21, 6:03 pm ET

http://biz.yahoo.com/prnews/041221/latu083_1.html

SAN DIEGO, Dec. 21 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM - News) today updated its financial guidance for the first fiscal quarter ending December 26, 2004.

The following statements are forward looking and actual results may differ materially. Please see the description of certain risk factors in this release and QUALCOMM's reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks.

Based on the current business outlook, we now anticipate first fiscal quarter revenues excluding the QUALCOMM Strategic Initiatives (QSI) segment to be approximately $1.4 billion, the high end of our prior guidance. We now anticipate first fiscal quarter diluted earnings per share excluding the QSI segment to be approximately $0.26-$0.27. This estimate is based on the shipment of approximately 39 million MSM phone chips during the quarter.

On November 3, 2004, we estimated first fiscal quarter revenues excluding the QSI segment to be in the range of approximately $1.3 to $1.4 billion, an increase of approximately 12 to 23 percent year over year assuming application of the "New Method"(1) of estimating royalties for the first fiscal quarter of 2004. We had anticipated first fiscal quarter diluted earnings per share excluding QSI to be approximately $0.24-$0.26, compared to $0.23 in the year ago quarter. We had estimated shipments of approximately 38 to 39 million MSM phone chips compared to 39 million in the prior quarter and 32 million in the year ago quarter.

Royalty reports from our licensees, received in the first fiscal quarter for CDMA products sold in our fourth fiscal quarter ended September 26, 2004, indicate sales of approximately 40 million new CDMA/WCDMA units compared to our prior estimate of approximately 41 million units. These royalty reports also indicate that the average selling price of new CDMA/WCDMA units was approximately $212, compared to our prior estimate of approximately $213.

"3G CDMA continues to grow worldwide at a rapid pace," said Dr. Irwin Mark Jacobs, chairman and CEO, QUALCOMM. "Reports from our licensees indicate that infrastructure sales were particularly strong in the September quarter. Driving these results were new deployments and phones and expansions to existing CDMA2000 1xEV-DO networks. In addition, WCDMA deployments continue and recent favorable results from Hutchison's 3 service demonstrate that operators can leverage high-speed data, greater capacity and resulting lower costs to speed transition of subscribers to third- generation networks."

"Clearly, this worldwide expansion of CDMA further demonstrates a growing confidence on the part of operators that data services represent a significant opportunity to increase average revenue per subscriber. The increasing capabilities offered by our segmented chipset roadmap are driving more features into wireless handsets such as higher megapixel cameras, multimedia and 3D gaming. At the same time, our integration strategy is enabling these features to be delivered by our chipset customers at a lower cost and faster time to market."

On November 3, 2004, on a GAAP basis we estimated total QUALCOMM revenues for the first fiscal quarter to increase year-over-year approximately 7 to 18 percent and total QUALCOMM diluted earnings per share of $0.23-$0.25, including an estimated $0.01 loss per share attributed to the QSI segment. Based on the current business outlook, we now expect total revenues to be approximately $1.4 billion, the high end of our prior guidance. We now expect total diluted earnings per share of approximately $0.26-$0.27, including the QSI segment, which is estimated to be approximately breakeven.

Due to their nature, certain income and expense items such as realized gains and losses, gains or losses on derivatives and asset impairments cannot be accurately forecast. Accordingly, the Company excludes such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.

QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. Headquartered in San Diego, California, QUALCOMM is included in the S&P 500 Index and is a 2003 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.

Note Regarding Use of Non-GAAP Financial Measures

The Company presents financial information excluding the QUALCOMM Strategic Initiatives (QSI) segment to facilitate evaluation by management, investors and analysts of its ongoing core operating businesses, including QUALCOMM CDMA Technologies (QCT), QUALCOMM Technology Licensing (QTL) and QUALCOMM Wireless & Internet (QWI). QSI results relate to strategic investments for which the Company has exit strategies of varying durations. Management believes that the information excluding QSI presents a more representative measure of the operating and liquidity performance of the Company because it excludes the effect of fluctuations in the value of investments that are unrelated to the Company's operational performance. The financial information excluding QSI should be considered in addition, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Reconciliations between total QUALCOMM results and results excluding QSI are presented on the Company's web site at http://www.qualcomm.com.

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 development, deployment and commercial acceptance of CDMA based networks and CDMA based technology, including CDMA2000 1X, 1xEV- DO and WCDMA, both domestically and internationally; our dependence on major customers and licensees; fluctuations in the demand for CDMA based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; our dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; developments in current and future litigation, as well as the other risks detailed from time-to-time in the Company's SEC reports.

QUALCOMM is a registered trademark and MSM is a trademark of QUALCOMM Incorporated. All other trademarks are the property of their respective owners.

(1) The New Method of estimating royalties is based solely on reports received from licensees. The adoption of the New Method was announced by the Company in advance of the announcement of results for the fourth quarter and fiscal 2004 year ended September 26, 2004. Results under this method are presented herein to assist investors with evaluating financial performance on a comparable basis. Refer to the schedule included at the end of this release which reconciles results of the first and fourth quarters of fiscal 2004 as if the New Method of estimating royalties was in effect for the entire 2004 fiscal year, to results reported in accordance with GAAP.
For further information please contact: Bill Davidson, Investor Relations, [phone], [e-mail], or Emily Gin, Corporate Public Relations, [phone], [e-mail], both of QUALCOMM Incorporated.

QUALCOMM Incorporated
A Comparison of the "Prior Method" of Estimating Royalties and the
"New Method" of Estimating Royalties
($ in millions)

Q104 Q404
Prior Method of Estimating Royalties
Estimate of estimated licensees for
prior period $151 $253
Royalties reported by estimated
licensees for prior period 208 255
Prior period variance included in
reporting period 57 2
Other royalties reported in
reporting period 45 99
Estimate for estimated licensees for
current period 205 --
Total QTL royalty revenues from
external licensees 307 101
Intercompany revenue 32 36
License revenue 15 14
Total QTL revenue using prior method $353
Total QTL revenue including
prospective change to new method in
Q4 '04 $151

New Method of Estimating Royalties
Total royalties reported by external
licensees (a) $253 $354
Intercompany revenue 32 36
License revenue 15 14
Total QTL Revenue using new method $300 $404

Difference between the estimation
methods $54 $(253)


Total QCOM revenues as reported
under GAAP $1,207 $1,118
Less: Difference between the
estimation methods 54 (253)
Total QCOM revenues using new method 1,153 1,371
Total QCOM revenues, and QCOM
revenues excluding QSI using new
method $1,153 $1,371

TOTAL QCOM net income as reported
under GAAP $352 $393
Less: Net income attributed to
difference between the estimation
methods (b) 33 (154)
Total QCOM net income using new
method 319 547
Less: QSI net income (loss) (66) 57
QCOM net income excluding QSI using
new method $386 $490

QCOM diluted EPS as reported under
GAAP $0.21 $0.23
EPS attributed to difference between
the methods $0.02 $(0.09)
Total QCOM diluted EPS using new
method $0.19 $0.32
EPS attributed to QSI $(0.04) $0.03
QCOM diluted EPS excluding QSI using
new method $0.23 $0.29

Shares previously used for diluted
EPS 827 n/a
Adjusted for stock split 1,654 1,692


All EPS amounts have been adjusted to reflect the 2:1 stock split that
was effected during the fourth quarter of fiscal 2004.

QTL revenues as reported under GAAP and using the new method are
presented to illustrate the difference between the prior method
used for royalties prior to the fourth quarter of fiscal 2004 and the new
method implemented starting in the fourth quarter of fiscal 2004.

(a) Represents royalty revenue that would have been reported during the
period if the "new method" had been adopted retroactively.
Does not represent royalty revenue that will be recognized under GAAP
due to the effect of the accounting change on these periods.
(b) QTL's rounded effective tax rate is 39% in fiscal 2004.

Sums may not equal totals due to rounding.

Revenues and earnings excluding the QSI segment, including forward
looking periods, are calculated as total QUALCOMM revenues and
earnings less revenues and earnings attributed to the QSI segment. No
other adjustments are made.




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Source: QUALCOMM Incorporated