10-QPeriod: Q2 FY2002

QUALCOMM INC/DE Quarterly Report for Q2 Ended Mar 31, 2002

Filed April 24, 2002For Securities:QCOM

Summary

Qualcomm Inc. reported its second-quarter fiscal year 2002 results, showcasing a slight year-over-year decrease in total revenues to $696 million from $717 million in the prior year period. This decline was primarily attributed to a decrease in royalties and license fees, as well as lower integrated circuit sales, partially offset by growth in software and services. The company's operating expenses saw an increase, driven by higher research and development and selling, general, and administrative costs related to new product initiatives and the BREW platform. Despite revenue pressures, the company maintained a healthy liquidity position with $2.9 billion in cash and marketable securities. A significant event during the quarter was the consolidation of Vesper Holding, which impacted reported revenues and expenses. Qualcomm continues to invest strategically in the growth of CDMA technology and related services, managing its diverse portfolio of investments and financing arrangements.

Key Highlights

  • 1Total revenues for the second quarter of fiscal 2002 were $696 million, a slight decrease from $717 million in the prior year period.
  • 2Operating expenses increased, with research and development and selling, general, and administrative expenses rising due to new product initiatives and the BREW platform.
  • 3The company maintained a strong liquidity position, with $2.9 billion in cash and marketable securities as of March 31, 2002.
  • 4Consolidation of Vesper Holding became effective in November 2001, impacting reported revenues and expenses.
  • 5Strategic investments and financing activities continue to be a key focus, including ongoing support for CDMA carriers.
  • 6The company's intellectual property licensing (QTL) segment saw a decrease in revenues and earnings before taxes, primarily due to inventory build-ups by carriers in the prior year.
  • 7Qualcomm is navigating a challenging market characterized by global economic weakness and evolving wireless technology standards.

Frequently Asked Questions

The primary driver for the decrease in total revenues was a $32 million decrease in royalties and license fee revenue and a $20 million decrease in revenues from sales of integrated circuits, partially offset by a $10 million increase in software development and services revenues related to its QChat and BREW products.

The consolidation of Vesper Holding, effective in November 2001, contributed $36 million to revenues and $71 million to cost of revenues in the second quarter of fiscal 2002. It also increased selling, general, and administrative expenses by $22 million. In the QSI segment, Vesper Holding's results accounted for a $45 million loss, net of minority interest.

Qualcomm believes its current cash and cash equivalents and marketable securities, along with cash generated from operations, will be sufficient to meet its expected working capital and other capital requirements, including strategic investments, customer financing, and other commitments. The company may raise additional funds through debt or equity issuance if needed.

Key risks include global economic weakness impacting the wireless industry, the risk that CDMA technology may not be widely deployed or face delays in 3G adoption, substantial investments and loans to potentially unsuccessful CDMA carriers, reliance on a limited number of key customers and licensees, foreign currency fluctuations, intense competition, and rapid technological change.