10-KPeriod: FY2012

QUALCOMM INC/DE Annual Report, Year Ended Sep 30, 2012

Filed November 7, 2012For Securities:QCOM

Summary

Qualcomm Inc. reported strong performance for the fiscal year ending September 29, 2012, with revenues reaching $19.1 billion and net income of $6.1 billion. The company's growth was primarily driven by its integrated circuit business (QCT), which saw a significant increase in shipments of Mobile Station Modem (MSM) integrated circuits. Licensing revenues (QTL) also showed robust growth, fueled by the adoption of CDMA-based devices and higher royalty rates. Looking ahead, Qualcomm anticipates continued growth in global wireless connections, particularly in 3G and 3G/4G multimode devices, driven by the expanding smartphone market and increasing data demands. The company remains committed to significant investments in research and development for next-generation technologies like 4G LTE, aiming to maintain its leadership position in the rapidly evolving wireless communications industry. Despite potential challenges from intense competition and ongoing legal and regulatory scrutiny, Qualcomm's strong financial position, substantial intellectual property portfolio, and strategic investments position it well for future expansion.

Financial Highlights

52 data points
Beta

Revenue

$19.12B

62.9% Gross Margin

Net Income

$6.11B

31.9% Net Margin

EPS (Diluted)

$3.51

Total Assets

$43.01B

Cash & Equivalents

$3.81B

Free Cash Flow

$6.00B

Financial Statements
Beta
Revenue$19.12B
Cost of Revenue$7.10B
Gross Profit$12.03B
R&D Expenses$3.92B
SG&A Expenses$2.27B
Operating Expenses$13.44B
Operating Income$5.68B
Interest Expense$90.00M
Net Income$6.11B
EPS (Basic)$3.59
EPS (Diluted)$3.51
Shares Outstanding (Basic)1.70B
Shares Outstanding (Diluted)1.74B

Key Highlights

  • 1Revenue growth of 28% year-over-year to $19.1 billion, driven by strong performance in both the QCT (integrated circuits) and QTL (licensing) segments.
  • 2QCT segment revenue increased by 37% to $12.1 billion, with MSM integrated circuit shipments up 22% to 590 million units.
  • 3QTL segment revenue increased by 16% to $6.3 billion, benefiting from higher royalty rates and increased sales of CDMA-based devices.
  • 4Significant investment in R&D, totaling $3.9 billion, representing 20% of revenues, underscoring the company's commitment to innovation in wireless technologies.
  • 5Strong balance sheet with $26.8 billion in cash, cash equivalents, and marketable securities as of September 30, 2012.
  • 6Continued commitment to returning capital to shareholders through dividends and share repurchases, with $1.6 billion in dividends paid and $1.3 billion in shares repurchased during fiscal 2012.
  • 7The company is actively pursuing a 4G LTE strategy, anticipating its widespread deployment and continuing its leadership in OFDMA-based technologies.

Frequently Asked Questions

Qualcomm's revenue growth in fiscal year 2012 was primarily driven by two key segments: the QCT (Qualcomm CDMA Technologies) segment, which supplies integrated circuits and system software, and the QTL (Qualcomm Technology Licensing) segment, which generates revenue from licensing its intellectual property. QCT saw increased shipments of its MSM integrated circuits, particularly for mobile devices, while QTL benefited from higher royalty revenues due to the increased adoption of CDMA-based devices and evolving technologies like 3G/4G.

Qualcomm is heavily investing in research and development for next-generation wireless technologies, including 4G LTE (an OFDMA-based standard). The company is developing and supplying integrated circuits that support these advanced standards and is actively engaging in licensing agreements for OFDMA-based products. They anticipate continued growth in 3G and 3G/4G multimode devices while also focusing on the transition and deployment of 4G technologies globally.

Key risks include intense competition in the rapidly changing semiconductor and wireless technology industries, dependence on the commercial deployment and success of specific technologies (like CDMA and OFDMA), potential pricing pressures, ongoing legal and regulatory challenges related to its business practices and intellectual property, and reliance on a few major customers for a significant portion of its revenue. Supply chain disruptions and global economic conditions are also noted as potential risks.

Qualcomm's intellectual property strategy is a core component of its business. The company holds a substantial portfolio of patents, particularly those essential to CDMA and OFDMA technologies. It licenses these patents to device manufacturers and other companies, generating significant royalty revenues. The strategy focuses on broad licensing to foster industry growth and ensure a return on its R&D investments, while also defending its intellectual property against challenges.