Mobile hardware monolith Qualcomm reported their first quarter earnings yesterday with an understandable amount of gusto. Despite a venerable position in the market and years of growth and experience, Qualcomm managed to bring in enough profit at $4.7 billion to break their company record. While Qualcomm is known predominately as the manufacturer of the Snapdragon mobile processor, Qualcomm produces a bulk amount of the total hardware found in mobile phones. In fact, open up practically any cellphone and you’ll find some sort of Qualcomm chip. Given how profitable the company already was and with competition in the field growing, it’s impressive that it continues to climb in value. Kudos, Qualcomm!
Check out the full presser after the break!
Qualcomm Announces Record First Quarter Fiscal 2012 Results
Revenues $4.7 Billion
GAAP EPS $0.81, Non-GAAP EPS $0.97
— Record First Quarter Results, Raising Fiscal 2012 Guidance —
SAN DIEGO, Feb. 1, 2012 /PRNewswire-FirstCall/ — Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced record results for the first quarter of fiscal 2012 ended December 25, 2011.
“I am pleased to report another record quarter with revenues, earnings and MSM shipments reaching all-time highs, driven by our industry-leading chipset portfolio and the continued strong demand for smartphones around the world,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. “We are raising our revenue and earnings guidance as our broad licensing partnerships and extensive chipset roadmap, led by our integrated Snapdragon processors, position us well for strong growth in fiscal 2012. We continue to invest in innovative wireless technologies, products and services, and we are excited about the opportunities ahead as 3G and 4G continue to expand across new device types and geographies.”
First Quarter Results (GAAP)
- Revenues: (1) $4.68 billion, up 40 percent year-over-year (y-o-y) and 14 percent sequentially.
- Operating income: (1) $1.55 billion, up 24 percent y-o-y and 25 percent sequentially.
- Net income: (2) $1.40 billion, up 20 percent y-o-y and 33 percent sequentially.
- Diluted earnings per share: (2) $0.81, up 14 percent y-o-y and 31 percent sequentially.
- Effective tax rate: (1) 19 percent for the quarter.
- Operating cash flow: $1.78 billion, 38 percent of revenues.
- Return of capital to stockholders: $461 million, including $362 million, or $0.215 per share, of cash dividends paid, and $99 million to repurchase 2.0 million shares of our common stock.
(1) The results of FLO TV are presented as discontinued operations, and prior period amounts have been adjusted accordingly. Revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates throughout this news release are from continuing operations (i.e., before discontinued operations and the adjustment for noncontrolling interests), unless otherwise stated.
(2) Net income and diluted earnings per share throughout this news release are attributable to Qualcomm (i.e., after discontinued operations and adjustment for noncontrolling interests), unless otherwise stated.
Non-GAAP First Quarter Results
Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain share-based compensation, certain acquisition-related items starting with acquisitions completed in the third quarter of fiscal 2011 and certain tax items.
- Revenues: $4.68 billion, up 40 percent y-o-y and 14 percent sequentially.
- Operating income: $1.87 billion, up 32 percent y-o-y and 15 percent sequentially.
- Net income: $1.67 billion, up 24 percent y-o-y and 22 percent sequentially.
- Diluted earnings per share: $0.97, up 18 percent y-o-y and 21 percent sequentially. Excludes $0.01 loss per share attributable to the QSI segment, $0.11 loss per share attributable to certain share-based compensation and $0.03 loss per share attributable to certain acquisition-related items (the sum of Non-GAAP earnings per share and items excluded do not equal GAAP earnings per share due to rounding).
- Effective tax rate: 19 percent for the quarter.
- Free cash flow (defined as net cash from operating activities less capital expenditures): $1.49 billion, 32 percent of revenues.
Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included at the end of this news release.
The following should be noted with regards to the above results and year-over-year comparisons: first quarter fiscal 2012 results included the results of Qualcomm Atheros, Inc., which was acquired on May 24, 2011. Additionally, on December 27, 2011, after the close of our first fiscal quarter, we completed the sale of substantially all of our 700 MHz spectrum for $1.9 billion. As a result, we will recognize a gain in discontinued operations of $1.2 billion in the second quarter of fiscal 2012 related to the close of this transaction.
First Quarter Key Business Metrics
- MSM™ shipments: 156 million units, up 32 percent y-o-y and 23 percent sequentially.
- September quarter total reported device sales: approximately $41.4 billion, up 22 percent y-o-y and 6 percent sequentially.
- September quarter estimated 3G/4G device shipments: approximately 191 to 195 million units, at an estimated average selling price of approximately $212 to $218 per unit.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $22.0 billion at the end of the first quarter of fiscal 2012, compared to $20.9 billion at the end of the fourth quarter of fiscal 2011 and $19.1 billion a year ago. As of December 25, 2011, $948 million remained authorized for repurchases under our stock repurchase program, net of put options outstanding. On January 10, 2012, we announced a cash dividend of $0.215 per share payable on March 23, 2012 to stockholders of record as of March 2, 2012.
Research and Development
($ in millions) Non-GAAP Share-Based
QSI GAAP First quarter fiscal 2012 $ 746 $ 126 $ 1 $ 873 As a % of revenues 16% 19% First quarter fiscal 2011* $ 560 $ 85 $ 4 $ 649 As a % of revenues 17% 19% Year-over-year change ($) 33% 48% N/M 35% *As adjusted for discontinued operations. N/M – Not Meaningful
Non-GAAP R&D expenses increased 33 percent y-o-y primarily due to an increase in investments in the development of integrated circuit products (including connectivity products), next-generation technologies and other initiatives to support the acceleration of advanced wireless products and services.
Selling, General and Administrative
($ in millions) Non-GAAP Share-BasedCompensation AcquisitionRelatedItems QSI GAAP First quarter fiscal 2012 $ 381 $ 101 $ 9 $ 12 $ 503 As a % of revenues 8% 11% First quarter fiscal 2011* $ 343 $ 70 $ – $ (4) $ 409 As a % of revenues 10% 12% Year-over-year change ($) 11% 44% N/M N/M 23% *As adjusted for discontinued operations. N/M – Not Meaningful
Non-GAAP selling, general and administrative (SG&A) expenses increased 11 percent y-o-y primarily due to increases in employee-related and marketing costs.
Effective Income Tax Rates
Our fiscal 2012 effective income tax rates are estimated to be approximately 18 percent for GAAP and approximately 18 to 19 percent for Non-GAAP. The first quarter effective income tax rates for GAAP and Non-GAAP were both 19 percent.
Qualcomm Strategic Initiatives
The QSI segment makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum. QSI also includes the discontinued operations of our FLO TV business. GAAP results for the first quarter of fiscal 2012 included a $0.01 loss per share for the QSI segment.
The following statements are forward looking, and actual results may differ materially. The “Note Regarding Forward-Looking Statements” in this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks.
Our outlook does not include provisions for future asset impairments or for pending legal matters, other than future legal amounts that are probable and estimable. Further, due to their nature, certain income and expense items, such as realized investment and certain derivative gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our business outlook to the extent they are reasonably certain; however, actual results may vary materially from the business outlook.
The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook. The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.
Qualcomm’s Business Outlook Summary SECOND FISCAL QUARTER Q2 FY11 Current Guidance Results (1) Q2 FY12 Estimates (2) Revenues $3.87B $4.6B – $5.0B Year-over-year change increase 19% – 29% Non-GAAP Diluted earnings per share (EPS) $0.86 $0.91 – $0.97 Year-over-year change increase 6% – 13% Diluted EPS attributable to QSI ($0.18) $0.43 Diluted EPS attributable to share-based compensation ($0.09) ($0.11) Diluted EPS attributable to acquisition-related items $0.00 ($0.03) Diluted EPS attributable to tax items $0.00 n/a GAAP Diluted EPS $0.59 $1.20 – $1.26 Year-over-year change increase 103% – 114% Metrics MSM shipments approx. 118M approx. 146M – 154M Year-over-year change increase 24% – 31% Total reported device sales (3) $40.0B* $47.5B – $51.5B* Year-over-year change increase 19% – 29% *Est. sales in December quarter, reported in March quarter FISCAL YEAR FY 2011 Prior Guidance Current Guidance Results FY 2012 Estimates FY 2012 Estimates (2) Revenues $14.96B $18.0B – $19.0B $18.7B – $19.7B Year-over-year change increase 20% – 27% increase 25% – 32% Non-GAAP Diluted EPS $3.20 $3.42 – $3.62 $3.55 – $3.75 Year-over-year change increase 7% – 13% increase 11% – 17% Diluted EPS attributable to QSI ($0.23) ($0.04) $0.41 Diluted EPS attributable to share-based compensation ($0.37) ($0.46) ($0.47) Diluted EPS attributable to acquisition-related items ($0.12) ($0.12) ($0.13) Diluted EPS attributable to tax items $0.04 n/a n/a GAAP Diluted EPS $2.52 $2.80 – $3.00 $3.36 – $3.56 Year-over-year change increase 11% – 19% increase 33% – 41% Metrics Est. fiscal year* 3G/4G device average selling price range (3) approx $203 – $209 approx $197 – $209 approx $204 – $216 *Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters