10-QPeriod: Q1 FY2014

QUALCOMM INC/DE Quarterly Report for Q1 Ended Dec 29, 2013

Filed January 29, 2014For Securities:QCOM

Summary

Qualcomm Incorporated (QCOM) reported strong performance for the quarter ended December 29, 2013, demonstrating robust revenue growth driven by its semiconductor business (QCT) and a significant contribution from its technology licensing arm (QTL). Total revenues reached $6.62 billion, a 10% increase year-over-year, with net income attributable to Qualcomm at $1.875 billion. The company saw a substantial increase in Mobile Station Modem (MSM) integrated circuit shipments, indicating strong demand for its core products. Key financial highlights include a healthy increase in operating cash flow and a significant gain from the sale of discontinued operations (Omnitracs division). Qualcomm also continued its commitment to returning capital to shareholders through substantial share repurchases and increased dividend payments. Despite a notable impairment charge related to its QMT division's manufacturing facility, the company's core business performance remained strong, supported by ongoing investments in R&D and strategic initiatives. The company also highlighted the growing importance of 4G LTE deployment, particularly in China, as a future growth driver.

Financial Highlights

50 data points
Beta

Revenue

$6.62B

59.1% Gross Margin

Net Income

$1.88B

28.3% Net Margin

EPS (Diluted)

$1.09

Total Assets

$46.28B

Cash & Equivalents

$8.29B

Free Cash Flow

$2.78B

Financial Statements
Beta
Revenue$6.62B
Cost of Revenue$2.71B
Gross Profit$3.92B
R&D Expenses$1.33B
SG&A Expenses$623.00M
Operating Expenses$5.13B
Operating Income$1.49B
Interest Expense$3.00M
Net Income$1.88B
EPS (Basic)$1.11
EPS (Diluted)$1.09
Shares Outstanding (Basic)1.69B
Shares Outstanding (Diluted)1.72B

Key Highlights

  • 1Total revenues increased by 10% to $6.62 billion compared to the prior year's quarter.
  • 2Net income attributable to Qualcomm was $1.875 billion, with diluted earnings per share of $1.09.
  • 3MSM integrated circuit shipments increased by 17% year-over-year, reaching approximately 213 million units.
  • 4The company recorded a significant gain of $430 million (net of taxes) from the sale of its Omnitracs division.
  • 5Operating cash flow increased to $2.78 billion, up from $1.97 billion in the prior year's quarter.
  • 6Qualcomm repurchased $1.0 billion of its common stock and paid $590 million in dividends during the quarter, demonstrating a commitment to shareholder returns.
  • 7A $444 million impairment charge was recognized for a manufacturing facility within the QMT division.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the Equipment and Services segment (QCT), which saw higher unit shipments of MSM integrated circuits and increased sales of connectivity products. The Licensing segment (QTL) also contributed positively due to increased sales of CDMA-based products by licensees.

Qualcomm recorded a $444 million impairment charge related to a manufacturing facility in its QMT division. This charge impacted operating income and net income for the quarter, though it is a non-cash expense primarily related to the re-evaluation of future cash flows from the asset.

Qualcomm is actively returning capital to shareholders through a combination of significant share repurchases and dividend payments. During this quarter, the company repurchased $1.0 billion of its stock and paid $590 million in dividends. They also announced a stated intention to return 75% of free cash flow to stockholders over the foreseeable future.

Qualcomm expects continued growth from the global transition to 3G and 3G/4G networks, particularly in emerging regions like China, driven by low-tier smartphones. The company also anticipates strong consumer demand for advanced 3G and 3G/4G multimode devices. The licensing of 4G LTE spectrum in China is seen as a significant opportunity for growth and innovation.