10-KPeriod: FY2008

QUALCOMM INC/DE Annual Report, Year Ended Sep 28, 2008

Filed November 6, 2008For Securities:QCOM

Summary

QUALCOMM INC/DE (QCOM) filed its 2008 10-K report on November 5, 2008, detailing its performance and outlook for the fiscal year ending September 27, 2008. The company reported significant revenue growth, driven by its strong position in the wireless telecommunications market, particularly in CDMA technologies. The report highlights Qualcomm's substantial investments in research and development to maintain its technological leadership and expand its intellectual property portfolio, which underpins its licensing business. Key business segments include Qualcomm CDMA Technologies (QCT) for integrated circuits and system software, Qualcomm Technology Licensing (QTL) for intellectual property licensing, and Qualcomm Wireless Internet (QWI) for various wireless data services. The company also detailed its strategic initiatives, including investments in emerging technologies and its MediaFLO business. Despite a challenging economic environment, Qualcomm demonstrated resilience, with strong revenue and income from continuing operations, supported by its diversified business model and a growing global demand for wireless services.

Financial Highlights

48 data points
Beta

Revenue

$11.14B

69.4% Gross Margin

Net Income

$3.16B

28.4% Net Margin

EPS (Diluted)

$1.90

Total Assets

$24.71B

Cash & Equivalents

$1.84B

Free Cash Flow

$3.56B

Financial Statements
Beta
Revenue$11.14B
Cost of Revenue$3.41B
Gross Profit$7.73B
R&D Expenses$2.28B
SG&A Expenses$1.72B
Operating Income$3.73B
Interest Expense$22.00M
Net Income$3.16B
EPS (Basic)$1.94
EPS (Diluted)$1.90
Shares Outstanding (Basic)1.63B
Shares Outstanding (Diluted)1.66B

Key Highlights

  • 1Total revenues for fiscal year 2008 reached $11.14 billion, a substantial increase from $8.87 billion in fiscal year 2007.
  • 2Net income from continuing operations was $3.16 billion for fiscal year 2008.
  • 3The company continues to invest heavily in R&D, with expenditures totaling $2.3 billion in fiscal year 2008.
  • 4Qualcomm's licensing segment (QTL) generated significant revenue, with royalty revenues playing a crucial role in the company's financial performance.
  • 5The company faced significant litigation, notably with Broadcom, concerning patent infringement claims.
  • 6Qualcomm reported strong growth in CDMA-based device shipments, indicating continued market penetration.
  • 7The company highlighted its strategic focus on emerging technologies and market expansion, particularly in international markets like South Korea, China, and Japan.

Frequently Asked Questions

Qualcomm derives its revenue from multiple sources, primarily the sale of integrated circuit products (through its Qualcomm CDMA Technologies segment) and licensing fees and royalties for its intellectual property (through its Qualcomm Technology Licensing segment). It also generates revenue from messaging and other services, hardware sales, software development and licensing, and multimedia content delivery.

Key risks include the potential for slower-than-expected deployment of its technologies (CDMA, OFDMA, FLO), dependence on the success of its customers and licensees, potential delays or failures in 3G network deployments, challenges to its patent portfolio and licensing practices from competitors and regulatory bodies, and broader economic downturns affecting consumer demand and the financial markets. Significant litigation, such as the ongoing disputes with Broadcom, also poses a risk.

The filing notes that the global financial crisis and resulting economic slowdown were causing inventory contraction and were likely to lead to lower consumer demand and prices for CDMA-based devices, adversely affecting Qualcomm's revenues and operating results. The crisis also impacted the value of its marketable securities portfolio and net investment income.

Qualcomm's strategy heavily relies on its extensive patent portfolio, particularly related to CDMA technology. The company licenses these patents to manufacturers and network operators, generating substantial royalty revenue. They actively defend their intellectual property and have committed to licensing essential patents on fair and reasonable terms, which has been a catalyst for industry growth.