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Qualcomm Announces Record First Quarter Fiscal 2011 Results

SAN DIEGO Jan. 26, 2011 December 26, 2010

Paul E. Jacobs

First Quarter Results (GAAP)  

  • Revenues:  $3.35 billion, up 25 percent year-over-year (y-o-y) and 13 percent sequentially.
  • Operating income:  $1.11 billion, up 26 percent y-o-y and 33 percent sequentially.
  • Net income:  $1.17 billion, up 39 percent y-o-y and 35 percent sequentially.
  • Diluted earnings per share:  $0.71, up 42 percent y-o-y and 34 percent sequentially.  
  • Effective tax rate:  12 percent for the quarter.
  • $1.5 billion
  • $0.19

Non-GAAP First Quarter Results

Non-GAAP results 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.

  • Revenues:  $3.35 billion, up 25 percent y-o-y and 13 percent sequentially.
  • Operating income:  $1.42 billion, up 25 percent both y-o-y and sequentially.
  • Net income:  $1.35 billion, up 29 percent y-o-y and 22 percent sequentially.
  • $0.05 $0.07 $0.02
  • Effective tax rate:  19 percent for the quarter.  
  • $1.5 billion

$1.5 billion

Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included at the end of this news release.  

First Quarter Key Business Metrics

  • CDMA-based Mobile Station Modem™ (MSM™) shipments: approximately 118 million units, up 28 percent y-o-y and 6 percent sequentially.
  • $34.0 billion
    • $201 to $207

Cash and Marketable Securities  

$19.1 billion $18.4 billion $18.9 billion January 5, 2011 $45 $3.1 billion January 14, 2011 $0.19 March 25, 2011 February 25, 2011

Research and Development

($ in millions)

Non-GAAP

Share-Based
Compensation

QSI

GAAP

First quarter fiscal 2011

$       560

$    86

$  25

$    671

As a % of revenues

17%

N/M

20%

First quarter fiscal 2010

$       503

$    72

$  21

$    596

As a % of revenues

19%

N/M

22%

Year-over-year change ($)

11%

19%

19%

13%

N/M – Not Meaningful

Non-GAAP R&D expenses increased 11 percent y-o-y primarily due to an increase in costs related to the development of integrated circuit products, next-generation CDMA and OFDMA technologies and other initiatives to support the acceleration of advanced wireless products and services. QSI R&D expenses were primarily related to our FLO TV™ subsidiary.

Selling, General and Administrative

($ in millions)

Non-GAAP

Share-Based
Compensation

QSI

GAAP

First quarter fiscal 2011

$         343

$    72

$    22

$    437

As a % of revenues

10%

N/M

13%

First quarter fiscal 2010

$         272

$    68

$    39

$    379

As a % of revenues

10%

N/M

14%

Year-over-year change ($)

26%

6%

(44%)

15%

Non-GAAP selling, general and administrative (SG&A) expenses increased 26 percent y-o-y primarily due to an increase in employee-related costs and patent-related costs and other professional fees.  QSI SG&A expenses decreased 44 percent y-o-y primarily due to a decrease in selling and marketing costs related to FLO TV.

Effective Income Tax Rate

$32 million

Qualcomm Strategic Initiatives

$0.05 $134 million

December 20, 2010 $1.925 billion

March 2011 $64 million $300 million to $375 million

December 2010 December 2012 $1.09 billion

Business Outlook

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.  

Our outlook does not include provisions for future asset impairments or 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.  Further, due to their nature, certain income and expense items, such as realized investment gains or losses, or gains and losses on certain derivative instruments, cannot be accurately forecast.  Accordingly, we only include such items in our business outlook to the extent they are reasonably certain; however, actual results may vary materially from the business outlook.

Our second quarter and fiscal 2011 outlook reflects the impact related to the resolution of one of our previously disclosed licensee disputes. Favorable resolution of the Panasonic dispute will be further upside if completed this fiscal year.

In addition to our ongoing operating costs, our business outlook for the second fiscal quarter and fiscal 2011 include restructuring and restructuring-related charges related to FLO TV and the MediaFLO technology division that are currently expected to be incurred.

We have not included any estimates related to the Atheros business in our fiscal 2011 outlook.  The transaction is expected to close in the first half of calendar 2011.  Excluding amortization of acquired intangibles, we expect the acquisition to be modestly accretive to earnings per share in fiscal year 2012, the first full year of combined operations.

The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook.  The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.

Qualcomm’s Business Outlook Summary

SECOND FISCAL QUARTER  

Q2 FY10

Current Guidance

Results

Q2 FY11 Estimates

Non-GAAP  

Revenues  

$2.66B

$3.45B – $3.75B

 Year-over-year change  

increase 30% – 41%

Diluted earnings per share (EPS)  

$0.59

$0.77 – $0.81

 Year-over-year change  

increase 31% – 37%

GAAP  

Revenues  

$2.66B

$3.45B – $3.75B

 Year-over-year change  

increase 30% – 41%

Diluted EPS  

$0.46

$0.50 – $0.54

 Year-over-year change  

increase 9% – 17%

Diluted EPS attributable to QSI  

($0.05)

($0.18)

Diluted EPS attributable to share-based compensation

($0.06)

($0.09)

Diluted EPS attributable to certain tax items

($0.02)

$0.00

Diluted EPS attributable to in-process R&D

$0.00

$0.00

Metrics  

MSM shipments  

approx. 93M

approx. 113M – 117M

 Year-over-year change  

increase 22% – 26%

Total reported device sales (1)  

$27.7B*

$36.5B – $38.5B*

 Year-over-year change  

increase 32% – 39%

Est. CDMA-based devices shipped (1)

approx. 148M – 152M*

not provided

Est. CDMA-based device average selling price (1)

approx. $182 – $188*

not provided

*Est. sales in December quarter, reported in March quarter

FISCAL YEAR  

FY 2010

Prior Guidance

Current Guidance

Results

FY 2011 Estimates

FY 2011 Estimates

Non-GAAP  

Revenues

$10.98B

$12.4B – $13.0B

$13.6B – $14.2B

 Year-over-year change

increase 13% – 18%

increase 24% – 29%

Diluted EPS

$2.46

$2.63 – $2.77

$2.91 – $3.05

 Year-over-year change

increase 7% – 13%

increase 18% – 24%

GAAP  

Revenues  

$10.99B

$12.4B – $13.0B

$13.6B – $14.2B

 Year-over-year change  

increase 13% – 18%

increase 24%  – 29%

Diluted EPS

$1.96

$2.08 – $2.22

$2.32 – $2.46

 Year-over-year change  

increase 6% – 13%

increase 18%  – 26%

Diluted EPS attributable to QSI  

($0.13)

($0.22)

($0.27)

Diluted EPS attributable to share-based compensation

($0.27)

($0.32)

($0.33)

Diluted EPS attributable to certain tax items

($0.10)

($0.01)

$0.01

Diluted EPS attributable to in-process R&D

$0.00

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