Qualcomm CEO Announces Definitive Agreement To Acquire Atheros Conference Call Transcript

QUALCOMM Inc. (QCOM)

Definitive Agreement to Acquire Atheros Announcement Conference Call

January 5, 2011 8:30 AM ET

Executives

Warren Kneeshaw – VP, IR

Paul Jacobs – Chairman and CEO

Steve Mollenkopf – EVP and Group President

Craig Barratt – President and CEO, Atheros Communications, Inc.

Bill Keitel – CFO, Principal Accounting Officer and EVP

Analysts

Brian Modoff – Deutsche Bank

James Faucette – Pacific Crest Securities

Simona Jankowski – Goldman Sachs Group

Maynard Um – UBS Investment Bank

Rod Hall – JPMorgan Chase

Mark Sue with RBC Capital Markets

Mark McKechnie – Gleacher & Company

Stacy Rasgon – Sanford Bernstein

Jonathan Goldberg – Deutsche Bank Securities

Romit Shah – Nomura Securities

Arnab Chanda – Roth Capital Partners

David Wong – Wells Fargo

Gus Richard – Piper Jaffray

Craig Berger – FBR Capital Markets

Alex Gauna – JMP Securities

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Qualcomm Announces Definitive Agreement to Acquire Atheros Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, this conference call is being recorded January 5, 2011. The playback number for today’s call is 1800-642-1687. International callers, please dial 706-645-9291. The playback reservation number is 35060578. I would now like to turn today’s call over to Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.

Warren Kneeshaw

Thank you (Gillette). Good morning everyone and welcome to our conference call regarding announcement of Qualcomm’s pending acquisition of Atheros. Today’s call will include brief remarks by Dr. Paul Jacobs; Steve Mollenkopf, and Dr. Craig Barratt, President and Chief Executive Officer of Atheros. In addition Bill Keitel, will join the question-and-answer session. An Internet presentation and audio broadcast accompany this call, and you can access them by visiting www.qualcomm.com.

We may make forward-looking statements relating to our expectations and other future events that are subject to a number of risks and uncertainties and these expectations may differ materially from Qualcomm’s actual results. Please review our SEC filings for a detailed presentation of each of our businesses and associated risks and other important factors that may cause our actual results to differ from these forward-looking statements. Before making any voting decisions with respect to the proposed acquisition investors are urged to read Atheros’ proxy statement and other relevant materials when they become available because they will contain important information about the transaction.

With that I would like to turn it over to Qualcomm’s Chairman and Chief Executive Officer, Dr. Paul Jacobs.

Paul Jacobs

Thanks Warren, and good morning everyone. Thanks for joining us. I am very pleased to announce our planned acquisition of Atheros, the company that many of you are well acquainted with. They are leader in connectivity and networking solutions and they have a strong track record of execution, growth and financial performance. Just to say this acquisition makes sense on a lot of levels. From a vision standpoint, we believe that communications capability will go into more and more devices in the world around us and that the phone will be used to interact with these devices.

From a strategy standpoint, we will continue to lead in technology through significant R&D investments and this acquisition allows us to profit from those investments across a larger base of devices. And from a tactical standpoint, we’ll have access to a strong team and a new set of technologies, partners, and distribution channels and will also be able to broaden our relationships with existing customers.

Now in terms of the specifics of the deal, we’ve entered into a definitive agreement to purchase Atheros for $45 per share in cash for an enterprise value of $3.1 billion. The transaction has been approved by the Qualcomm and Atheros Boards of Directors. And we expect the transaction to close in the first half of 2011. Atheros will become known as Qualcomm Networking & Connectivity or QNC and Craig Barratt will continue as President of QNC reporting to Steve Mollenkopf. We’re looking forward to working even more closely with Craig. Excluding amortization of acquired intangibles, we expect the acquisition to be modestly accretive to earnings per share in fiscal 2012, the first full year of operation. And we’ll finalize our estimates of the transaction’s financial impact as well as the accounting for the transaction on deal close.

Firstly, I am very excited about this acquisition. We’ve had a close working relationship with Atheros and I am confident that our teams will come together quickly and effectively. And now I’d like to turn the call over to Steve Mollenkopf for some specifics.

Steve Mollenkopf

Thanks Paul and good morning everyone. Thanks for joining us on the call. Our announcement today is an important step for our business. It is a clear indication of our strategy to move aggressively into silicon beyond cellular. We believe that it will expand our opportunities with new products, new customers, and new sales channels. It will enable us to grow a platform business in additional areas such as consumer electronics, networking and computing.

You’ve heard us talk about our vision around the convergence of mobility, computing and consumer electronics. Our announcements today should be viewed as a statement about our commitment to provide a complete set of solutions to address this trend, as it is clearly unfolding in front of us today. You have also seen us execute on our strategy for quite some time. We lead with technology and win by providing complete system solutions. This acquisition provides us a wider set of products and technologies to expand that strategy.

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