Qualcomm Incorporated is an American global semiconductor company that designs, manufactures and markets digital wireless telecommunications products and services. You can find their chipsets in many devices.
Yesterday, Qualcomm announced its earnings results for the first quarter of the new fiscal year, which ended on Dec. 29, 2013. The numbers show a very positive first quarter. This information was passed along during yesterday afternoon’s QUALCOMM First Quarter Fiscal Year 2014 Earnings Conference Call.
Chairman and CEO of Qualcomm, Dr. Paul E. Jacobs, had the following to say about it, "We are pleased with the start to our fiscal year, with record results in quarterly revenues, device sales reported by licensees and MSM chip shipments. We are pleased to report record revenues this quarter driven by strong growth in both, QTC and QTL."
A breakdown of the first quarter results for Generally Accepted Accounting Principles (GAAP) is as follows:
- Revenues: $6.62 billion, up 10 percent year-over-year (y-o-y) and 2 percent sequentially.
- Operating income: $1.49 billion, down 28 percent y-o-y and 6 percent sequentially.
- Net income: $1.88 billion, down 2 percent y-o-y and up 25 percent sequentially.
- Diluted earnings per share: $1.09, even y-o-y and up 27 percent sequentially.
- Effective tax rate: 18 percent.
- Operating cash flow: $2.78 billion, up 41 percent y-o-y; 42 percent of revenues.
- Return of capital to stockholders: $1.59 billion, including $1.00 billion through repurchases of 14.2 million shares of common stock and $590 million, or $0.35 per share, of cash dividends paid.
It should be mentioned that at the end of November 2013, Qualcomm sold its Omitracs fleet tracking system. This was one of the company’s early success stories, but it had been struggling to grow lately. The gain on the sale of Omnitracs recorded in the first quarter of fiscal 2014 is presented as discontinued operations.
Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI) segment, as well as certain share-based compensation, acquisition-related items and tax items. The non-GAAP breakdown is as follows:
- Revenues: $6.62 billion, up 10 percent y-o-y and 2 percent sequentially.
- Operating income: $1.85 billion, down 24 percent y-o-y and 5 percent sequentially.
- Net income: $2.16 billion, down 2 percent y-o-y and up 19 percent sequentially.
- Diluted earnings per share: $1.26, even y-o-y and up 20 percent sequentially.
- Effective tax rate: 18 percent.
Dr. Jacobs also added, “Looking forward, we expect our performance to reflect the continued strong global growth of smartphones, our chipset leadership position and our competitive strengths in 3G/4G technologies and products.”
As you can see from this, the numbers do reflect Dr. Jacobs’ positive outlook for Qualcomm. He also took the time to thank the employees, customers and suppliers for their support throughout his tenure as CEO.
With his eyes focused toward the future, he added, “Looking forward, opportunities are vast. We work with our partners to help them expand their data capacity by up to 1,000 fold with solutions such as our small cells and other innovations such as LTE in unlicensed spectrum. We are helping to drive adoption of mobile technologies into several exciting new categories including automotive, healthcare and the connected home through our industry leading mobile computing connectivity offerings.”
Fiscal 2014’s first quarter showed a $665 million gain. After taxes, this figure comes down to $430 million, which relates to $0.25 per share. This was seen from its discontinued operations that were associated with the sale of its Omnitracs division.
There was also a $444 million charge or $346 million after taxes that are a result from an impairment charge. This came from certain property, plant and equipment that is related to its Qualcomm Mirasol Display Technology (QMT).
According to Qualcomm, its cash, cash equivalents and marketable securities totaled $31.6 billion at the end of the first quarter of fiscal 2014. This is compared to $28.4 billion from a year ago and $29.4 billion realized at the end of the fourth quarter of fiscal 2013.
Taking a look at the unit side, we see the following results for the first quarter:
- MSM chip shipments: 213 million units, up 17 percent y-o-y and 12 percent sequentially.
- September quarter total reported device sales: approximately $61.6 billion, up 16 percent y-o-y and 2 percent sequentially.
- September quarter estimated 3G/4G device shipments: approximately 276 to 280 million units, at an estimated average selling price of approximately $219 to $225 per unit.
Steven Mollenkopf, who has been named CEO elective of Qualcomm, said, “We are well-positioned to address the significant opportunities ahead and I look forward to guiding the company during its next phase of growth. I am proud to have been given this opportunity and I look forward to assuming the CEO role in March. Turning to our fiscal first-quarter, our QTL and QCT delivered strong financial results and we are off to a solid start to fiscal 2014.”
Qualcomm is looking and moving ahead. In early December 2013, China awarded 4G network licenses to it three major carriers. Mollenkopf said, “Tuning to China. We are pleased to see that the 4G spectrum licenses have now been issued. We are working closely with the operators as well as domestic and international OEMs to meet this new growth opportunity.”
It looks like Qualcomm is starting its fiscal year strong and the chief financial officer, George Davis, sees the outlook for this fiscal year to be unchanged. He said, “We are increasing our earnings per share guidance to adjust for the above expectation performance in the fiscal first quarter, modestly tempered by a somewhat softer outlook in our fiscal second quarter. We expect fiscal 2014 non-GAAP earnings per share to be in the range of $5 to $5.20, up approximately 13 percent year-over-year at the midpoint relative to 2013 and up $0.05 at the midpoint from our prior guidance.”
Edited by
Cassandra Tucker 
QUICK LINKS 
