Qualcomm reports record quarterly revenues, boasts 100th Snapdragon device

- Raises Fiscal 2011 Revenue and Earnings Guidance -

SAN DIEGO – April 20, 2011 – Qualcomm Incorporated (Nasdaq: QCOM), a number one developer and innovator of advanced wireless technologies, services and products, today announced results for the second one quarter of fiscal 2011 ended March 27, 2011.

“We’re pleased to report record quarterly revenues, and we’re raising our revenue and earnings guidance for the year because the demand for smartphones across an array of geographies and tiers continues to grow,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. “As well as, we now have resolved the second one of the 2 previously disclosed licensee disputes. We continue to execute on our strategic priorities as our partners deploy our technologies and solutions to provide leading wireless services and products to consumers worldwide.”

Second Quarter Results (GAAP)

• Revenues: $3.88 billion, up 46 percent year-over-year (y-o-y) and 16 percent sequentially.
• Operating income: $1.07 billion, up 38 percent y-o-y and down 3 percent sequentially.
• Net income:1 $999 million, up 29 percent y-o-y and down 15 percent sequentially.
• Diluted earnings per share:1 $0.59, up 28 percent y-o-y and down 17 percent sequentially.
• Effective tax rate: 21 percent for the quarter.
• Operating cash flow: $1.77 billion, up 123 percent y-o-y; 46 percent of revenues.
• Return of capital to stockholders: $316 million, or $0.19 per share, of money dividends paid.

Non-GAAP Second Quarter Results

Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain share- based compensation, certain tax items that aren’t concerning the present year and purchased in- process research and development (R&D) expense.

• Revenues: $3.87 billion, up 45 percent y-o-y and 16 percent sequentially.
• Operating income: $1.65 billion, up 55 percent y-o-y and 17 percent sequentially.
• Net income: $1.45 billion, up 47 percent y-o-y and eight percent sequentially.
• Diluted earnings per share: $0.86, up 46 percent y-o-y and 5 percent sequentially. The present quarter excludes $0.18 loss per share because of the QSI segment and $0.09 loss per share owing to certain share-based compensation.
• Effective tax rate: 22 percent for the quarter.
• Free cash flow: $1.85 billion, up 125 percent y-o-y; 48 percent of revenues (defined as net cash from operating activities less capital expenditures).

Detailed reconciliations between results reported in keeping with generally accepted accounting principles (GAAP) and Non-GAAP results are included on the end of this news release.

Within the comparisons summarized above, the subsequent must be noted with respect to results for the second one quarter of fiscal 2011: GAAP and Non-GAAP results included $401 million in revenues involving prior quarters using agreements entered into with two licensees to settle ongoing disputes, including an arbitration proceeding with Panasonic Mobile Communications Co. Ltd.; GAAP results included $310 million in expenses within the QSI segment relating to the FLO TVTM restructuring plan; and GAAP and Non-GAAP results included $120 million in impairment charges with regards to our Firethorn division, including $114 million in goodwill impairment.

Second Quarter Key Business Metrics

• CDMA-based Mobile Station ModemTM (MSMTM) shipments: approximately 118 million units, up 27 percent y-o-y and flat sequentially.
• December quarter total reported device sales: approximately $40.0 billion, up 44 percent y-o-y and 18 percent sequentially.
• December quarter estimated CDMA-based device shipments: approximately 195 to 200 million units, at an estimated average selling price of roughly $200 to $206 per unit.

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled approximately $22.1 billion on the end of the second one quarter of fiscal 2011, in comparison with $19.1 billion on the end of the primary quarter of fiscal 2011 and $18.2 billion a year ago. On April 7, 2011, we announced a cash dividend of $0.215 per share payable on June 24, 2011 to stockholders of record as of May 27, 2011.

On January 5, 2011, we announced that we had entered right into a definitive agreement under which we intend to amass Atheros Communications, Inc. for $45 per share in cash, which represented an enterprise value of roughly $3.1 billion on that date. The transaction has received the approval of Atheros’ stockholders and likely foreign regulators, and the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired. The completion of the merger remains subject to the satisfaction of certain closing conditions, including the receipt of a further foreign regulatory approval. We continue to expect the merger to shut within the third quarter of fiscal 2011.

Qualcomm Strategic Initiatives

The QSI segment manages our strategic investment activities, including FLO TV, and makes strategic investments in early-stage and other companies and in wireless spectrum, consisting of the Broadband Wireless Access (BWA) spectrum won within the India auction. GAAP results for the second one quarter of fiscal 2011 included an $0.18 loss per share for the QSI segment. The second one quarter of fiscal 2011 QSI results included $376 million in operating expenses and restructuring charges primarily on the topic of FLO TV.

We’ve got agreed to sell substantially all of our 700 MHz spectrum for $1.9 billion, subject to the satisfaction of customary closing conditions, including approval by the U.S. Federal Communications Commission. The agreement follows our previously announced plan to restructure and evaluate strategic options regarding the FLO TV business and network. Under the restructuring plan, the FLO TV business and network were shut down on March 27, 2011, and we’re now not pursuing the MediaFLO Technologies business. Restructuring activities under this plan were initiated within the fourth quarter of fiscal 2010 and are expected to be substantially complete by the tip of fiscal 2012. The spectrum was classified as held on the market at March 27, 2011.

Within the second quarter of fiscal 2011, restructuring and restructuring-related charges relating to this plan included in QSI results were $310 million. We estimate that we are going to incur future restructuring and restructuring-related charges related to this plan of as much as $65 million, that are primarily concerning lease exit and other costs.

Business Outlook

Here statements are forward looking and actual results may differ materially. The “Note Regarding Forward-Looking Statements” on the end of this news release provides an outline of certain risks that we are facing, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks.

Our outlook doesn’t include provisions for future asset impairments or the results of injunctions, damages or fines with regards to any pending legal matters unless awarded or imposed by a court, governmental entity or other regulatory body. Further, because of their nature, certain income and expense items, together with realized investment gains or losses, or gains and losses on certain derivative instruments, can not be accurately forecast. Accordingly, we only include such items in our business outlook to the level they’re reasonably certain; however, actual results may vary materially from the business outlook.

Along with our ongoing operating costs, our business outlook for fiscal 2011 includes restructuring and restructuring-related charges because of FLO TV which can be currently expected to be incurred.

We’ve not included any estimates on the topic of the Atheros business in our third fiscal quarter or fiscal 2011 outlook. The transaction is predicted to shut within the third quarter of fiscal 2011.