QCOM CCNov 6,2001
Rev
EPS 2 cent less than projections,
short fall due to no gettting loan interest in Mexico, sales merge agreement under discussion
Highlights of year:
Record Rev in licenses, positive cash flow of 1.5 bil in year, 2.4 bil in cash, no debt, CDMA phones still doing better than other technologies, launch of 3G in Korea,
16 new CDMA agreements, 7 in China, Position technology to locate calls, several new chipsets for 1X and video enabled devices, single mode CDMA chipsets introduces, Intor BREW, signed 13 brew licensees,
focus to grow CDMA market share, investing heavily in R+D,
BREW will fuel interest
Will integrate new functions in chips to drive growth,
generating positive cash flow from operations
expect restructuring in Vespa in Brazil to finish in Q, need 1.5 bil dollar investment
Working with China Unicom for CDMA deployment. China launch in January.
Commenting on Globalstar aviation system.
Chip Business:
Q4
Sept 500 mil CDMA chip shipped to date, 525 mil total shipments, rev up 10 percent to 1.37 bil Y-Y
Q4 shiped 13 mil chip up from 11 mil Y-Y, down from 14 mil Q-Q
December Q 15 mil chips, 1X chip now more part of mix, higher ASP's , 4 mil 1x chips in Q, 6 mil for year, 6 mil next Q
CSM Infrastructure chips, 9 mil voice channels shipped vers 2 mil Y-Y, lower in next Q Y-Y
CSM shipments will gain traction later in year as China launches and rst of world.
GPS 1.0 intro Japan, selected by Sprint, VZ.
Production versions of 1X chips for video etc ....
Sampled W-CDMA chip set in Q. 1X 1XCV, WCDMA compatible
Wireless Internet Group:
includes technology license, internet services, wireless business solutions, internet media etc ...
Pratical Apps based on BREW platform, stimulate color screen, memory and new feature set to drive replacement.
Should drive higher royalties as more features.
Size of market, ASP ,and number of replacement sets and BREW rev key metrics
BREW gives new markets.
Technology licensing: QTL had 16 new licensees and 27 re-newals, NOK sign in Q4 2001
Internet services launched this year, firsttrial in Korea in Sept, games, chat, navigation.
Expect BREW to launch by end of 2001.
Sharp doing a handset for VZ for their BREW deployment.
Wireless Business Solutions Segment: 13,000 Omnitrack shipped in Q, 33000 for year, down 24 percent Y-Y, price reduction last week to drive sales, launched initiative for heavy equipment market,
Digital Media: Working with movies studios to deploy end to end solution, complete sample with media ready chips
Financials:
EPS: in line
Investment income lower by 23 mil
Suspended payment from Pigaso lead to shortfall, required new injection of money, assets exceed debt, expect successful injection of cash. QCOM owns only debt.
SAB 101 effecting licensing recognition. In Q3 expected impact to be negligible. In Q4 saw large effect. Charge as a result. Re-stated earnings in past Q's.
Omnitrak written off over 5 years now as can be used only on QCOM network. Charge of 89 mil. Increase EPS by 2 mil for Q4, 13 mil for year, before taxes.
License rev recognition: Access to future patents means rev must be recognized over a longer period. Smooths rev recognition. Charge of 57 mil. Reduce EPS by 34 mil in Q and 64 mil for year.
Unearned income for both items 296 mil till Sept 2001, amortized next 5 years. Omnitrack amortized over next 7 years.
Y2002 additional earnings of 101 mil, offset by deferred licensing fee, neutral overall
Rev up 6 percent Y-Y, down Q-Q
EPS 38 percent
MSN handset chip shipments 14 mil, up from 13 mil Q-Q
Globalstar lose of 7 cent per share, rev down Y-Y
CDMA phone sale 75 mil overall for year vers 60 mil Y-Y
ASP down less than 10 percent Y-Y, ASP on chips flat
1.2 bil in cash generated for year
Q4 chip rev up Q-Q, higher CSM shipments and ASP offset lower unit shipments
OM in QCT 20 per up Q-Q marginally, R+D investments growing while rev flat
Royalty/licensing up 5 percent Q-Q, OM in QTL 97 percent due to 11 mil transfer from FCC barer chip to carrier to pay for spectrum
Cash from Op 279 mil in Q, 63 mil invested in cap ex and investments
Outlook:
Strong CDMA market, 85 mil to 95 mil in 2002
1X and Brew drive replacement market in Korea, Japan and North Amer.
Growth in China and India.
Latin Amer flat but low cost phones could drive growth, below $100.
Decline in ASP of 10 percent for year, intro of 1X phones driving prices higher, Samsung phone 50 percent higher, so lower shipments overall Sales of lower cost phones will have lower ASP's. Overall chip ASP's flat as result
BREW rev will be minimial in 2002. Some carriers will launch in 2002
Op Ex up moderately in 2002, Globalstar engineering adding to run rate, moved from cost of sales to R+D
Head count will be constant in 2002
Investment Inc lower due to lower interest rates and lower carrier loan payments. Gains on equity 25 mil in 2001, Same in 2002, 115 mil in FCC voucher left, possible upside in EPS.
MSN handset chip Q1 2002 Shipments up to 15 to 16 mil, offset by lower CSM shipments and chip software rev, royalty and license increase Q-Q, other businesses flat
Investment income lower than Q4 due to lower interest rates and cash, carrier loan interest lower due to Pigaso mainly
Income tax same at 35 percent for 2002
Cash from Op 1.4 bil for year
Vespa deal in Brazil, QCOM would own 87 per of entity after completion, near completion of re-structuring, covers 70 percent of Brazil, should capture a large share of market, struggled under debt, focus on growth as opposed to profitability, focus is now profits, 1000 base stations, now using wireless phones as opposed to fixed wireless, will spin off to shareholders at some point
See another exciting year of growth. |
