Now, pre-market +1.25 ------------ QUALCOMM Increases Financial Guidance for the First Fiscal Quarter of 2006 Thursday December 8, 9:00 am ET
SAN DIEGO, Dec. 8 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM - News) today updated its financial guidance for the first fiscal quarter ending December 25, 2005.
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.
Pro Forma Defined
Pro forma results and guidance exclude the QUALCOMM Strategic Initiatives (QSI) segment, estimated share-based compensation expense and tax benefits related to prior years.
First Fiscal Quarter Business Outlook
Based on the current business outlook, we now anticipate first fiscal quarter revenues for QUALCOMM pro forma to be at the high end of our prior estimate of approximately $1.67 to $1.77 billion. We now anticipate first fiscal quarter pro forma diluted earnings per share to be approximately $0.38 to $0.39, compared to $0.28 in the year ago quarter. This estimate is based on the shipment of approximately 47 million Mobile Station Modem (MSM) chips during the quarter compared to approximately 39 million in the year ago quarter and approximately 40 million in the prior quarter. We previously anticipated first fiscal quarter pro forma diluted earnings per share to be approximately $0.36 to $0.38 and estimated shipments of approximately 46 to 48 million MSM chips.
The majority of our licensees have reported royalties in the first fiscal quarter for products shipped in the September quarter. Based on these reports, and an estimate of the few licensees yet to report, we anticipate September quarter shipments of approximately 52 million new CDMA/WCDMA units at an average selling price of approximately $213 compared to our prior estimate of approximately 51-53 million units at an average selling price of approximately $206.
"Our updated guidance for the first fiscal quarter reflects higher handset ASPs due primarily to strength in WCDMA handset shipments in Europe and a positive mix in 1xEV-DO MSM chipsets," said Dr. Paul E. Jacobs, chief executive officer of QUALCOMM. "Regionally we see strong demand for 1xEV-DO products in North America, Japan and Korea. Our expectations for stronger WCDMA demand in Europe appear to be materializing as well. We see several European operators being particularly aggressive this holiday season with their 3G offerings. In addition, we now anticipate operating expenses will be modestly lower and investment income will be modestly higher than previously expected for the first quarter."
The following table summarizes total QUALCOMM and QUALCOMM pro forma results for the first fiscal quarter of 2005 and guidance based on the current business outlook for the first fiscal quarter of 2006. The business outlook for total QUALCOMM includes the effects of the Company's adoption of SFAS No. 123R, Share-Based Payment (FAS 123R) in the first quarter of fiscal 2006, which requires the expensing of share-based payment programs. Total QUALCOMM guidance for the first fiscal quarter of 2006 includes approximately $0.04 diluted loss per share related to estimated share-based compensation expense. Due to their nature, certain income and expense items such as realized gains and losses in QSI, gains and losses on certain derivative instruments or 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.
The following estimates are approximations and are based on the current business outlook:
Business Outlook Summary
FIRST QUARTER Prior Guidance Current Guidance Q1'05 Q1'06 Q1'06 Results Estimates Estimates QUALCOMM Pro Forma Revenues $1.39B $1.67B - $1.77B High end prior guidance Year-over-year change increase 20% - 27% Diluted earnings per share (EPS) $0.28 $0.36 - $0.38 $0.38 - $0.39 Year-over-year change increase 29% - 36% increase 36% - 39%
Total QUALCOMM Revenues $1.39B $1.67B - $1.77B High end prior guidance Year-over-year change increase 20% - 27% Diluted earnings per share (EPS) $0.30 $0.30 - $0.32 $0.32 - $0.33 Year-over-year change increase 0% - 7% increase 7% - 10% EPS attributable to QSI $0.02 ($0.02) ($0.02) EPS attributable to share-based compensation n/a ($0.04) ($0.04)
Metrics MSM Shipments approx. 39M 46M - 48M 47M
CDMA/WCDMA handset units shipped approx. 40M* 51M - 53M* 52M*
CDMA/WCDMA handset unit wholesale average selling price approx. $212* $206* $213*
*Shipments in Sept. quarter, reported in Dec. quarter
Second Fiscal Quarter Business Outlook Consistent with our prior guidance, we continue to expect a sequential decline of approximately $0.02-$0.03 in pro forma and total QUALCOMM diluted earnings per share for the second fiscal quarter due primarily to seasonality in product shipments and sequentially higher operating expenses.
QUALCOMM Incorporated (www.qualcomm.com) 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, California, QUALCOMM is included in the S&P 500 Index and is a 2005 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Note Regarding Use of Non-GAAP Financial Measures
Pro forma financial measurements are used by management to evaluate, assess and benchmark the Company's operating results, and the Company believes that pro forma reporting represents relevant and useful information that is widely used by analysts, investors and other interested parties in its industry. The Company presents pro forma financial information excluding the QUALCOMM Strategic Initiatives (QSI) segment to facilitate evaluation of the Company's 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 view of the operating and liquidity performance of the Company because it excludes the effect of fluctuations in the values of investments that are unrelated to the Company's operational performance.
The Company presents pro forma information excluding tax benefits related to prior years to facilitate an understanding of its ongoing tax rate and after tax earnings. The Company believes that this presentation is useful in evaluating its performance on a consistent and comparable basis.
The Company presents pro forma financial information for fiscal 2006 that excludes the estimate of share-based compensation under FAS 123R. The Company's management uses pro forma financial measures excluding share-based compensation to evaluate, assess and benchmark the Company's operating results because share-based compensation is not an expense that requires or will require cash payment by the Company. The Company believes that financial data excluding the estimate of share-based compensation expense provides meaningful information about the Company's ongoing core operating businesses. This presentation is also useful to investors in evaluating performance on a basis that is consistent and comparable with periods prior to the adoption of FAS 123R in the first quarter of fiscal 2006.
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 total QUALCOMM results and QUALCOMM pro forma results discussed in this release 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 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 and price of CDMA based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; gains or losses on derivative instruments or asset impairments; 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®, Mobile Station Modem(TM), MSM(TM) are trademarks and/or service marks of QUALCOMM Incorporated. CDMA2000® is a registered trademark of the Telecommunications Industry Association. All other trademarks are the property of their respective owners.
Reconciliation of Non-GAAP Financial Measure Related to Prior Periods (In millions, except per share data)
First Quarter - Fiscal Year 2005 Reconciling QUALCOMM Total Segments QCT QTL QWI Items (1) Pro Forma QSI QUALCOMM Revenues $865 $400 $159 $(34) $1,390 $-- $1,390 Earnings from continuing operations before taxes 242 358 16 48 664 40 704 Net income 474 39 513 Diluted earnings per common share $0.28 $0.02 $0.30 Shares used in per share calculations 1,704 1,704 1,704
(1) Reconciling items related to revenues consist primarily of other non-reportable segment revenues less intersegment eliminations. Reconciling items related to earnings before taxes consist primarily of corporate expenses not allocated to the segments for management reporting purposes, unallocated net investment income, non-reportable segment results and the elimination of intercompany profit.
QUALCOMM Contact: Bill Davidson, Investor Relations Phone: 1-858-658-4813 Email: ir@qualcomm.com or QUALCOMM Contact: Jeremy James, Corporate Communications Phone: 1-858-845-7333 Email: corpcomm@qualcomm.com
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