QUALCOMM Increases Financial Guidance for the Second Fiscal Quarter of 2006
San Diego (ots/PRNewswire)
QUALCOMM Incorporated (Nasdaq: QCOM) today updated its financial guidance for the second fiscal quarter ending March 26, 2006.
The following statements are forward looking and actual results may differ materially. Please see "Note Regarding Forward-Looking Statements" at the end of this news release for a description of certain risk factors and QUALCOMM's annual and quarterly 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, tax benefits related to prior years and acquired in-process research and development (R&D) expense.
Second Fiscal Quarter Business Outlook
Based on the current business outlook, we now anticipate second fiscal quarter revenues for QUALCOMM pro forma to be approximately US$1.75 to US$1.82 billion. We now anticipate second fiscal quarter QUALCOMM pro forma diluted earnings per share to be approximately US$0.40 to US$0.41, compared to US$0.29 in the year ago quarter. This estimate is based on the shipment of approximately 47-48 million Mobile Station Modem (MSM) chips during the quarter compared to approximately 37 million in the year ago quarter and approximately 47 million in the prior quarter. We previously anticipated second fiscal quarter QUALCOMM pro forma revenues of US$1.63 to US$1.73 billion, QUALCOMM pro forma diluted earnings per share of approximately US$0.35 to US$0.37 and estimated shipments of approximately 44 to 46 million MSM chips.
The majority of our licensees have reported royalties in the second fiscal quarter for products shipped in the December quarter. Based on these reports and an estimate of the few licensees yet to report, we anticipate December quarter shipments of approximately 67 million CDMA units (CDMA2000(TM) and WCDMA) at an average selling price of approximately US$209 compared to our prior estimate of approximately 59-61 million units at an average selling price of approximately US$209. Calendar year 2005 total CDMA handset shipments are estimated to have been approximately 209 million units, including approximately 49 million WCDMA units and approximately 160 million CDMA2000 units, compared to our prior estimate of 203 million units, including approximately 45 million WCDMA units and approximately 158 million CDMA2000 units.
"Reports from our licensees for handset shipments in the December quarter indicate stronger than expected WCDMA volumes in Europe and stronger than expected CDMA2000 volumes primarily in North America and India," said Dr. Paul E. Jacobs, CEO of QUALCOMM. "In our chipset business we are seeing greater than expected demand for shipments of our low-end voice-centric and high-end 1xEV-DO products in the March quarter. Based on our estimates of CDMA channel inventory and demand for our chipsets in the coming June quarter, we continue to believe CDMA channel inventories are within the normal historical band. In addition, we continue to work closely with our partners to achieve competitive price points for handsets that will bring the benefits of CDMA technology to more of the world's current and next billion wireless subscribers."
The following table summarizes total QUALCOMM (GAAP) and QUALCOMM pro forma results for the second fiscal quarter of 2005 and guidance for the second fiscal quarter of 2006 based on the current business outlook. Total QUALCOMM (GAAP) guidance for the second fiscal quarter of 2006 includes approximately US$0.05 diluted loss per share related to estimated share-based compensation. Estimated share-based compensation in future periods may vary materially from the business outlook as the methodology used to calculate this estimate is dependent on a variety of assumptions which are subject to market fluctuations and other factors.
Due to their nature, certain income and expense items such as realized investment gains or losses in QSI, gains and losses on certain derivative instruments or asset impairments, cannot be accurately forecast. Accordingly, the Company excludes forecasts of such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.
The following estimates are approximations and are based on the current business outlook:
Business Outlook Summary
(All figures in US$)
SECOND QUARTER
Prior Guidance Current Guidance
Q2'05 Q2'06 Q2'06
Results Estimates Estimates
QUALCOMM Pro Forma
Revenues $1.37B $1.63B - $1.73B $1.75B - $1.82B
Year-over-year change increase 19% - 27% increase 28% - 33%
Diluted earnings
per share (EPS) $0.29 $0.35- $0.37 $0.40- $0.41
Year-over-year change increase 21% - 28% increase 38% - 41%
Total QUALCOMM (GAAP)
Revenues $1.37B $1.63B - $1.73B $1.75B - $1.82B
Year-over-year change increase 19% - 27% increase 28% - 33%
Diluted earnings
per share (EPS) $0.31 $0.28- $0.30 $0.33- $0.34
Year-over-year change decrease 3% - 10% increase 6% - 10%
Diluted EPS
attributable
to in-process R&D n/a ($0.01) ($0.01)
Diluted EPS
attributable
to QSI ($0.01) ($0.01) ($0.01)
Diluted EPS
attributable
to estimated
share-based
compensation n/a ($0.05) ($0.05)
EPS attributable to
tax benefit related
to prior years $0.03 n/a n/a
Metrics
MSM Shipments approx. 37M 44M - 46M 47-48M
CDMA/WCDMA handset
units shipped approx. 52M(i) 59M - 61M(i) 67M(i)
CDMA/WCDMA handset
unit wholesale
average selling
price approx. $207(i) $209(i) $209(i)
(i)Based on shipments in Dec. quarter, reported in Mar. quarterQUALCOMM 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 2006 FORTUNE 500(R) company traded on The Nasdaq Stock Market(R) under the ticker symbol QCOM.
Note Regarding Use of Non-GAAP Financial Measures
The Company presents pro forma financial information that excludes the QUALCOMM Strategic Initiatives (QSI) segment, estimated share-based compensation, tax benefits related to prior years and acquired in-process R&D expense. Pro forma financial measures used by the Company's management include pro forma revenues, pro forma earnings before tax, pro forma net income and pro forma diluted earnings per share. Pro forma information is 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's management uses pro forma financial information excluding QSI and share-based compensation to evaluate, assess and benchmark the Company's operating results because the effects of fluctuations in the value of investments and share-based compensation are viewed by management as unrelated to the Company's operational performance, and share-based compensation is not an expense that requires or will require cash payment by the Company. QSI results relate to strategic investments for which the Company has exit strategies of varying durations. The Company believes that financial data excluding the QSI segment and the estimate of share-based compensation provides investors with meaningful information about the Company's ongoing core operating businesses, including QUALCOMM CDMA Technologies, QUALCOMM Technology Licensing and QUALCOMM Wireless & Internet. 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 Company presents pro forma results excluding certain tax benefits related to prior years to provide management, as well as investors, a clearer understanding of its ongoing tax rate and after tax earnings. The Company believes that this presentation is useful in evaluating performance on a consistent and comparable basis.
The Company presents pro forma financial information for fiscal 2006 excluding acquired in-process R&D expense to evaluate, assess and benchmark the Company's operating performance because acquired in-process R&D expense is viewed by management as unrelated to the operating activities of the Company's ongoing core businesses. Management believes that this presentation is useful in evaluating performance on a consistent and comparable basis.
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 (GAAP) results and guidance and QUALCOMM pro forma results and guidance 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, WCDMA and HSDPA 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; 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(R), Mobile Station Modem(TM), MSM(TM) are trademarks and/or service marks of QUALCOMM Incorporated. CDMA2000(R) 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)
(All figures in US$)
Second Quarter - Fiscal Year 2005
Segments QCT QTL QWI Reconciling
Items (1)
Revenues $746 $493 $151 $(25)
EBT 158 448 8 52
Net income (loss)
Diluted EPS
Shares used in
per share calculations
Second Quarter - Fiscal Year 2005
Segments QUALCOMM Tax Total
Pro Forma Adjustments QUALCOMM
(2) QSI (GAAP)
Revenues $1,365 $-- $-- $1,365
EBT 666 -- (33) 633
Net income (loss) 487 55 (10) 532
Diluted EPS $0.29 $0.03 $(0.01) $0.31
Shares used in
per share calculations 1,704 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, charges that are not allocated to the
segments for management reporting purposes, unallocated net
investment income, non-reportable segment results and the
elimination of intercompany profit.
(2) During the second quarter of fiscal 2005, the Company decreased its
estimate of R&D costs allocable to the Company's foreign operations
under an intercompany cost sharing agreement. Due to this change in
estimate, the effective tax rate in the second quarter for total
QUALCOMM (GAAP) included a US$55 million benefit, or US$0.03 diluted
earnings per share, related to fiscal 2004. For fiscal 2005 pro
forma presentation, results have been adjusted to exclude the tax
benefit attributable to fiscal 2004.
QUALCOMM Contact:
Bill Davidson, Investor Relations
Phone: +1-858-658-4813
Email: ir@qualcomm.comWeb site: http://www.qualcomm.com
Contact:
Bill Davidson, Investor Relations of QUALCOMM Incorporated,
+1-858-658-4813, ir@qualcomm.com