QUALCOMM Incorporated Q4 2010 Earnings Call Transcript

QUALCOMM Incorporated (QCOM)

Q4 2010 Earnings Call

November 03, 2010 4:45 pm ET

Executives

Paul Jacobs - Chairman of the Board, Chief Executive Officer, Member of Finance Committee and Member of Strategic Committee

Steven Mollenkopf - Executive Vice President and Group President

William Keitel - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Donald Rosenberg - Executive Vice President, Corporate Secretary and General Counsel

Warren Kneeshaw - Vice President of Investor Relations

Analysts

Maynard Um - UBS Investment Bank

Mark McKechnie - Gleacher & Company, Inc.

Rod Hall - JP Morgan Chase & Co

Stacy Rasgon - Bernstein Research

Tim Long - BMO Capital Markets U.S.

Brian Modoff - Deutsche Bank AG

James Faucette - Pacific Crest Securities, Inc.

Ehud Gelblum - Morgan Stanley

Timothy Luke - Barclays Capital

Simona Jankowski - Goldman Sachs Group Inc.

T. Michael Walkley - Canaccord Genuity

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter Fiscal 2010 Conference Call. [Operator Instructions] The playback number for today's call is (800)642-1687. International callers, please dial (706)645-9291. The playback reservation number is 17283098. I would now like to turn the call over to Mr. Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.

Warren Kneeshaw

Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Dr. Paul Jacobs; Steve Mollenkopf; and Bill Keitel. In addition, Steve Altman, Don Rosenberg and Derek Aberle will join the question-and-answer session. An Internet presentation and audio broadcast accompany this call, and you can access them by visiting our website at www.qualcomm.com.

During this conference call, if we use any non-GAAP financial measures as defined by the SEC in Regulation G, you can find the required reconciliations to GAAP on our website. I'd also like to direct you to our earnings release, which was furnished with the SEC today and is available on our website. Our 10-K is in the process of being filed.

We may make forward-looking statements relating to our expectations and other future events that may differ materially from Qualcomm's actual results. Please review our SEC filings for a detailed presentation of each our businesses and associated risks and other important factors that may cause our actual results to differ from these forward-looking statements. I would also like to remind our listeners that our New York Analyst Day will be held on Wednesday, November 17. The analyst meeting will be webcast for those of you unable to attend in person. Consistent with past analyst days, we will be providing guidance disclosures at that time that are in addition to those provided in our earnings release and on this call.

And now it is my pleasure to introduce Qualcomm's Chairman and Chief Executive Officer, Dr. Paul Jacobs.

Paul Jacobs

Thank you, Warren, and good afternoon, everyone. Let me begin by saying how pleased I am with our performance this year as we delivered record earnings per share and record MSM chipset volumes. Looking forward, our outlook reflect strong revenue and earnings growth in fiscal 2011. In the coming year, we expect continued healthy growth in CDMA-based device shipments including smartphones and other data-centric devices driven by the global adoption of 3G and accelerating consumer demand for wireless data.

There's been a number of highlights this year. First, QCT continued to execute. Our Snapdragon platforms set the competitive benchmark for smartphone silicon, and we've taken a leadership position in offering our chipsets for key operating systems such as Android and Windows Phone 7. We offer the industry's broadest 3G product roadmap, and we continued to grow share in WCDMA chipsets.

Our Licensing business continues to be well positioned in 3G and multimode 3G LTE and now has over 185 licensees. Of note, we added another 14 new Chinese licensees in fiscal 2010, bringing the total number of Chinese licensees to 65. Our licensing program continues to foster innovation and supports the 3G ecosystem that benefits wireless consumers worldwide.

In terms of our Display business, we believe mirasol is a disruptive technology for the mobile display industry. The combined benefits of extremely low power consumption with sunlight viewability and support for color, video and touch sets us apart from the competition. We've made strong progress in the development of this display technology as we brought our first batch online and are targeting limited volume commercial 5.7-inch display devices in the first half of 2011. We're very excited about that prospects for this technology, and we'll be providing more details at our upcoming Analyst Day.

In FLO TV, we have decided to change directions, stepping back from the direct to consumer business and commencing a restructuring plan, under which we expect to exit the current FLO TV Service business. We're in discussions with a variety of interested parties and are continuing to evaluate other options for this business. Possibilities range from a new wholesale model, sale or joint venture with the third-party and/or sale of the spectrum licenses and discontinuance of the operation of the network.

Overall, we had strong earnings and cash flow performance in fiscal 2010. We returned more than $4 billion to shareholders in the form of a $3 billion buyback and over $1 billion in cash dividend. We ended the year well positioned with a strong balance sheet, including $18.4 billion in cash and marketable securities.

Turning to calendar 2011. We expect CDMA and multimode 3G 4G-based device shipments to grow to approximately 765 million units, up 20% year-over-year based on the midpoint of our projections. This growth will be driven by the global adoption of 3G, the continued demand for wireless data, strength in consumer demand for smartphones, growth in new connected device categories as well as 3G momentum in emerging regions.

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