10-KPeriod: FY2015

QUALCOMM INC/DE Annual Report, Year Ended Sep 27, 2015

Filed November 4, 2015For Securities:QCOM

Summary

Qualcomm Inc./DE (QCOM) reported revenues of $25.3 billion for the fiscal year ended September 27, 2015, a 5% decrease from the prior year. Net income attributable to Qualcomm also saw a significant decline of 34% to $5.3 billion. This performance was largely driven by challenges in the QCT segment, which experienced an 8% revenue decrease despite an 8% increase in integrated circuit shipments. The company cited a shift in customer share within the premium tier, a decline in share with a large customer, and intense competition in China as key factors impacting its semiconductor business. The QTL segment showed moderate growth, with total reported device sales by licensees increasing by 3%. Qualcomm also completed the acquisition of CSR plc for $2.3 billion to bolster its offerings in the Internet of Things and automotive infotainment sectors. Facing these headwinds, the company announced a Strategic Realignment Plan aimed at improving execution, enhancing financial performance, and driving profitable growth, which includes significant cost reductions. Qualcomm also continued its commitment to returning capital to shareholders, repurchasing $8.1 billion in stock and paying $2.9 billion in dividends during fiscal year 2015.

Financial Highlights

53 data points
Beta

Revenue

$25.28B

58.9% Gross Margin

Net Income

$5.27B

20.8% Net Margin

EPS (Diluted)

$3.22

Total Assets

$50.80B

Cash & Equivalents

$7.56B

Free Cash Flow

$5.51B

Financial Statements
Beta
Revenue$25.28B
Cost of Revenue$10.38B
Gross Profit$14.90B
R&D Expenses$5.49B
SG&A Expenses$2.34B
Operating Expenses$19.50B
Operating Income$5.78B
Interest Expense$104.00M
Net Income$5.27B
EPS (Basic)$3.26
EPS (Diluted)$3.22
Shares Outstanding (Basic)1.62B
Shares Outstanding (Diluted)1.64B

Key Highlights

  • 1Revenue decline of 5% to $25.3 billion in FY2015, primarily due to QCT segment pressures.
  • 2Net income decreased significantly by 34% to $5.3 billion.
  • 3QCT segment revenues down 8% despite 8% increase in MSM integrated circuit shipments, impacted by premium tier shifts and China competition.
  • 4QTL segment revenue grew 3% to $7.9 billion, driven by increases in CDMA-based product sales by licensees.
  • 5Acquisition of CSR plc completed for $2.3 billion to expand into IoT and automotive infotainment.
  • 6Announcement of a Strategic Realignment Plan to improve performance and profitability, including cost reductions.
  • 7Significant capital return to shareholders: $8.1 billion in stock repurchases and $2.9 billion in dividends in FY2015.

Frequently Asked Questions

In fiscal year 2015, Qualcomm's financial performance was primarily impacted by a 5% decrease in revenue to $25.3 billion and a 34% decrease in net income to $5.3 billion. Key challenges included a decline in the QCT segment's revenue due to shifts in premium tier customer share, a large customer's reduced share, and intense competition in China, despite an increase in chip shipments. The QTL segment provided some growth. The company also initiated a Strategic Realignment Plan to address these challenges.

Qualcomm announced a Strategic Realignment Plan in Q4 FY2015 focused on improving execution, financial performance, and driving profitable growth. This plan includes significant cost reduction initiatives, aiming to cut annual costs by approximately $1.1 billion, and a review of corporate and financial structures. The company is also making disciplined investments in core technologies and growth opportunities to build on its competitive position.

The acquisition of CSR plc in August 2015 for $2.3 billion is significant as it complements Qualcomm's existing offerings by adding products, channels, and customers in the growing areas of the Internet of Things (IoT) and automotive infotainment. CSR is known for its innovation in multifunction semiconductor platforms for these sectors.

Qualcomm is committed to returning capital to its shareholders and intends to return a minimum of 75% of its free cash flow through stock repurchases and dividends. In fiscal year 2015, the company repurchased $8.1 billion in stock (including accelerated share repurchases) and paid $2.9 billion in dividends, totaling $11 billion in capital returned. A significant stock repurchase program of up to $15 billion was authorized.