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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: q1000 who wrote (25035)	7/28/2002 5:05:38 PM
From: q1000	Read Replies (1) \| Respond to of 196538

Qualcomm Conference Call, Part V - Bill Keitel Bill Keitel - CFO GAAP and Pro Forma There are two key differences between GAAP and Pro Forma financials: • Goodwill amortization – primarily from our acquisition of SnapTrack. It will cease in the December quarter in accordance with FASB 142. • QSI consists of various investments to grow the CDMA market. We report the QSI segment separately to provide greater visibility to allow for valuations of this business separately from core operations. Earnings or losses from the QSI segment relate to a number of things, such as realized or unrealized changes in the values of investments and Qualcomm’s share of income or losses from consolidated subsidiaries and investments under the equity method of accounting. The ultimate measure of our QSI success will be the continued positive influence on growing CDMA and the cash realized versus cash invested. QSI • Losses before tax for the June quarter were $285 million compared to $119 million loss in the March quarter, an increase of $166 million. This happened because of the significant decline in market value of Leap Wireless investments during the June quarter. We transferred $167 million of cumulative unrealized losses recorded in equity to the earnings statement in accordance with the guidelines of FAS 115. We also reported $27 million in FAS 133 losses related Leap Wireless warrants as compared to the $49 million loss in the March quarter. • Our share of Vesper losses this quarter was $41 million, an $11 million improvement over the March quarter due to increased revenue and continued improvement in operations. We expect Vesper to require approximately $25 to $35 million in funding in this current quarter. • We recorded $19 million of losses for our share of Inquam and Wireless Knowledge compared to $16 million of losses in the prior quarter. The higher losses were due to Inquam’s expanded efforts to introduce 1x in Europe. • We also wrote off our remaining Wingcast assets and continued to adjust remaining investments in accordance with market valuation although with the exception of FAS 133 for Leap in no cases are gains reported in earnings until realized. Pro Forma Results Pro Forma include results of 3 core operating segments: Qualcomm CDMA Technologies or QCT, Qualcomm Technology Licensing or QTL and Qualcomm Wireless and Internet or QWI [I omitted much of the financial results that are in press release]. • We exceeded the high end of our April guidance by a penny per share. • Pro forma gross margin was 67%, consistent with the March quarter and up 200 basis points from the year-ago quarter due to improved gross margins in our QCT business. • R&D and SG&A expenses decreased to 30% of revenue in the June quarter from 32% both in both the March quarter and in the year-ago quarter. • Total employment decreased slightly for third consecutive quarter despite filling critical positions in our growing QCT and QWI businesses. Individual segment results • A 38% increase in 1x shipments to approximately 11 million units up from the March quarter of about 8 million units. This exceeded our previous guidance by approximately 1 million chips. • We expect to establish another new record in the September quarter by shipping approximately 18 to 19 million MSM chips. • QTL had $182 million if its revenue come from third party licenses and royalties, a 9% increase over the year-ago period. • QWI revenue was about equal to the March quarter. Loss this quarter was primarily due to the support of BREW deployment. • Our corporate cash, which excludes QSI, totaled approximately $2.6 billion, with essentially no debt. • In the June quarter, we generated $238 million cash flow from operations and employee stock purchase programs. • We invested $139 million of cash in transfers to QSI in the June quarter, primarily for Vesper, Pegaso interim financing and additional Inquam investments. Guidance for September quarter and full fiscal year • We have updated our forecast for CDMA phone sales and continue to expect 80 to 85 million CDMA phones sold this calendar year. • We do not see an inventory buildup problem. • Our fiscal year revenue and earnings guidance is based very largely upon existing orders. Again, we are more than 95% booked for this quarter in our chip business and visibility in our other businesses is good. • We expect pro forma revenues in the September quarter to increase approximately 10 to 13 percent compared to the June quarter. • We expect pro forma earnings per share in the September quarter to be approximately 26 to 27 cents. This estimate assumes shipment of approximately 15 million 1x MSM phone chips. • For the full fiscal year ending in September, we expect pro forma earnings per share to be in the range of 93 to 94 cents.