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Qualcomm logs stronger-than-expected 4Q13 earnings

Posted: 05 Feb 2014  Print Version  Bookmark and Share

Keywords:Qualcomm  mobile market  LTE-A  WiFi  smartphone 

Qualcomm has increased its full year earnings outlook for this year after posting slightly stronger-than-expected quarterly earnings as the mobile market growth intensifies in China. The company expects revenue in the fiscal Q2, which ends in March, to be between $6.1 billion and $6.7 billion.

"We are pleased with the start to our fiscal year, with record results in quarterly revenues, device sales reported by licensees and MSM chip shipments," said Paul Jacobs, chair and CEO of Qualcomm. "Looking forward, we expect our performance to reflect the continued strong global growth of smartphones, our chipset leadership position and our competitive strengths in 3G/4G technologies and products."

GAAP results for the quarter included $6.62 billion in revenue, up 10 percent, compared to the quarter a year ago, and two percent sequentially. The company's operating income was $1.49 billion, down 28 percent from a year ago, and down six percent sequentially. The company achieved a net income of $1.88 billion, down two percent from Q1 a year ago, and up 25 percent sequentially. These figures pertained to the quarter that ended December 29, 2013.

Jacobs discussed the coming arrival of Steve Mollenkopf as the new CEO, emphasizing Mollenkopf's 20 year tenure at the company. He thanked the company's employees, customers and suppliers for their support during his own tenure as CEO and touted the company's accomplishments during this period. "We have developed a broadly licensed and diversified portfolio of technologies not only from an air interface perspective, but also in many other mobile technologies such as computing and connectivity, with an industry-leading approach of integrating these core technologies that define the mobile experience," Jacobs said.

As the increase in smartphone adoption moves away from developed markets to emerging countries, the company has been looking to reduce costs in order to maintain its profit margins.

Although most of Qualcomm's revenue is derived from the sale of baseband chips allowing phones to communicate with carrier networks, most of its profit is from licensing CDMA cellphone patents. The company is making less in royalty revenue as a result of lower prices for smartphones.

Jacobs said that the company was now turning to automotive, healthcare and the connected home through its mobile computing connectivity offerings for further growth. Nevertheless, in spite of growing concerns over market saturation in mobile, Jacobs said, "We are still in the early rounds of smartphone adoption and in the early rounds of the transition to mobile."

As a result of its discontinued operations associated with the sale of its Omnitracs division, the company made $665 million gain ($430 million after tax). The company also incurred a $444 million charge ($346 million after tax) from an impairment charge on certain property, plant and equipment related to its QMT division it also had to pay. The company had to pay $173 million before and after tax as a result of litigation with ParkerVision. On the other hand, MSMTM chip shipments totalled 213 million units, up 17 percent YoY and 12 percent sequentially.

Qualcomm recently began developing technology to run LTE Advanced (LTE-A) over the 5GHz band. The Qualcomm technology is so far just a prototype with no specific intentions discussed for products supporting it. Still, this brings up the issue of 5GHz band should be used to handle a rising tide of mobile data, most of it carried today on cellular services operating in sub-3GHz licensed bands.

Qualcomm has also unveiled an ambitious automotive computer strategy. Qualcomm will leverage the company's in-car cellular modem technology for the automakers' telematics business. It will join the coming in-vehicle infotainment platform competition by introducing Snapdragon automotive technology, and it plans to enter the thriving advanced driver assistant systems market by bringing together dedicated short-range communications (DSRC) technology with its WiFi chip.

In late October, Qualcomm acquired from Arteris Tech for an undisclosed sum the FlexNoc intellectual property and about 43 engineers in France working on it. Arteris still has an unlimited use license to its FlexNoc patents, now owned by Qualcomm, as well as access to the source code and the right to modify it as needed.

- Zewde Yeraswork
  EE Times





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