Qualcomm Announces Second Quarter Fiscal 2013 Results Revenues $6.1 Billion

GAAP EPS $1.06, Non-GAAP EPS $1.17

— Record Quarterly Revenues; Raising Fiscal 2013 Guidance —

SAN DIEGO, April 24, 2013 /PRNewswire-FirstCall/ -- Qualcomm Incorporated (Nasdaq:  QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the second quarter of fiscal 2013 ended March 31, 2013.

"We delivered another strong quarter as the worldwide adoption of smartphones continues," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm.  "Looking forward, we are seeing strong traction with our new Qualcomm Snapdragon 600 and 800 processors, and we continue to expect healthy growth in 3G and 3G/4G multimode devices around the world.  We are pleased to be raising our calendar 2013 3G/4G device shipment estimates and our revenue and earnings guidance for fiscal 2013."

Second Quarter Results (GAAP)

  • Revenues: 1 $6.12 billion, up 24 percent year-over-year (y-o-y) and 2 percent sequentially.
  • Operating income: 1 $1.88 billion, up 24 percent y-o-y and down 10 percent sequentially.
  • Net income: 2 $1.87 billion, down 16 percent y-o-y* and 2 percent sequentially.
  • Diluted earnings per share: 2 $1.06, down 17 percent y-o-y* and 3 percent sequentially. 
  • Effective tax rate: 1 13 percent for the quarter.
  • Operating cash flow:  $2.22 billion, up 17 percent y-o-y; 36 percent of revenues.
  • Return of capital to stockholders:  $431 million, or $0.25 per share, of cash dividends paid.

* The second quarter of fiscal 2012 GAAP results included $761 million, net of income taxes, or $0.44 per share, for discontinued operations as a result of a $1.2 billion pre-tax gain associated with the sale of substantially all of our 700 MHz spectrum.

1 Throughout this news release, fiscal 2012 results for FLO TV are presented as discontinued operations. Revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before adjustments for noncontrolling interests and, for fiscal 2012, discontinued operations), unless otherwise stated.

2 Throughout this news release, net income and diluted earnings per share are attributable to Qualcomm (i.e., after adjustments for noncontrolling interests and discontinued operations), unless otherwise stated.

Non-GAAP Second Quarter Results

Non-GAAP results exclude the QSI segment and certain share-based compensation, acquisition-related items and tax items. 

  • Revenues:  $6.12 billion, up 24 percent y-o-y and 2 percent sequentially.
  • Operating income:  $2.23 billion, up 18 percent y-o-y and down 9 percent sequentially.
  • Net income:  $2.07 billion, up 17 percent y-o-y and down 6 percent sequentially.
  • Diluted earnings per share:  $1.17, up 16 percent y-o-y and down 7 percent sequentially. 
  • Effective tax rate:  16 percent for the quarter. 
  • Free cash flow (defined as net cash from operating activities less capital expenditures):  $1.99 billion, up 10 percent y-o-y; 33 percent of revenues.

Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included within this news release.  

Second Quarter Key Business Metrics

  • MSMchip shipments:  173 million units, up 14 percent y-o-y and down 5 percent sequentially.
  • December quarter total reported device sales:  approximately $61.1 billion, up 18 percent y-o-y and 15 percent sequentially.
    • December quarter estimated 3G/4G device shipments:  approximately 279 to 283 million units, at an estimated average selling price of approximately $214 to $220 per unit.   

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled $30.5 billion at the end of the second quarter of fiscal 2013, compared to $26.6 billion a year ago and $28.4 billion at the end of the first quarter of fiscal 2013.  On April 9, 2013, we announced a cash dividend of $0.35 per share payable on June 26, 2013 to stockholders of record as of June 5, 2013, which represents a 40 percent increase over our prior quarterly dividend.

Research and Development

($ in millions)

Non-GAAP


QSI


Share-Based

Compensation


Acquisition-Related Items


GAAP











Second quarter fiscal 2013

$    1,056


$    1


$           156


$            1


$  1,214

As % of revenues

17%








20%

Second quarter fiscal 2012

$       824


$    4


$           126


$             -


$     954

As % of revenues

17%








19%

Year-over-year change ($)

28%


 N/M 


24%


N/M


27%











N/M - Not Meaningful







Non-GAAP research and development (R&D) expenses increased 28 percent y-o-y primarily due to an increase in costs related to the development of CDMA-based 3G, OFDMA-based 4G LTE and other technologies for integrated circuit and related software products and to expand our intellectual property portfolio.

Selling, General and Administrative

($ in millions)

Non-GAAP


QSI


Share-Based
Compensation


Acquisition-Related Items


GAAP











Second quarter fiscal 2013

$       556


$    4


$            95


$           6


$ 661

As % of revenues

9%








11%

Second quarter fiscal 2012

$       488


$    4


$            97


$           6


$ 595

As % of revenues

10%








12%

Year-over-year change ($)

14%


 N/M 


(2%)


 N/M 


11%











N/M - Not Meaningful







Non-GAAP selling, general and administrative (SG&A) expenses increased 14 percent y-o-y primarily due to increases in employee-related expenses, patent-related expenses and selling and marketing expenses.    

Effective Income Tax Rates

Our fiscal 2013 annual effective income tax rates are estimated to be approximately 16 percent for GAAP and approximately 17 to 18 percent for Non-GAAP.  The second quarter effective income tax rates were 13 percent for GAAP and 16 percent for Non-GAAP, which are lower than the estimated annual effective tax rates primarily as a result of the retroactive reinstatement of the federal R&D tax credit during the second quarter.  The federal R&D tax credit benefit that related to fiscal 2012 of $0.04 per share was excluded from Non-GAAP results.   

QSI Segment

QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum.  GAAP results for the second quarter of fiscal 2013 included $0.02 earnings per share for QSI.

Business Outlook

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



THIRD FISCAL QUARTER



Q3 FY12
Results

Current Guidance
Q3 FY13 Estimates





Revenues



$4.63B

$5.8B - $6.3B



  Year-over-year change


increase 25% - 36%



Non-GAAP Diluted earnings per share (EPS)

$0.85

$0.97 - $1.05



  Year-over-year change


increase 14% - 24%



         Diluted EPS attributable to QSI

($0.01)

$0.00



         Diluted EPS attributable to share-based compensation

($0.12)

($0.13)



         Diluted EPS attributable to acquisition-related items

($0.03)

($0.04)



GAAP Diluted EPS

$0.69

$0.80 - $0.88



  Year-over-year change


increase 16% - 28%










Metrics





MSM chip shipments

141M 

163M - 173M 



  Year-over-year change


increase 16% - 23%



Total reported device sales (1)

 approx. $47.8B*

  approx. $51.0B - $56.0B*



  Year-over-year change


increase 7% - 17%



*Est. sales in March quarter, reported in June quarter


















FISCAL YEAR





FY 2012
Results (2)

Prior Guidance
FY 2013 Estimates (3)

Current Guidance
FY 2013 Estimates (3)







Revenues


$19.12B 

$23.4B - $24.4B

$24.0B - $25.0B



  Year-over-year change


increase 22% - 28%

increase 26% - 31%



Non-GAAP Diluted EPS

$3.71

$4.25 - $4.45

$4.40 - $4.55



  Year-over-year change


increase 15% - 20%

increase 19% - 23%



         Diluted EPS attributable to QSI

$0.40

($0.02)

$0.01



         Diluted EPS attributable to share-based compensation

($0.47)

($0.51)

($0.51)



         Diluted EPS attributable to acquisition-related items

($0.14)

($0.15)

($0.16)



         Diluted EPS attributable to tax items

$0.01

$0.04

$0.04



GAAP Diluted EPS

$3.51

$3.61 - $3.81

$3.78 - $3.93



  Year-over-year change


increase 3% - 9%

increase 8% - 12%









Metrics






Est. fiscal year* 3G/4G device average selling price range (1)

approx. $216 - $222

approx. $214 - $226

approx. $216 - $224



*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters












CALENDAR YEAR Device Estimates (1)




Prior Guidance
Calendar 2012
Estimates

Current
Calendar 2012
Estimates

Prior Guidance
Calendar 2013
Estimates

Current Guidance
Calendar 2013
Estimates



Est. 3G/4G device shipments







March quarter

approx. 206M - 211M

approx. 206M - 211M

not provided

not provided



June quarter

approx. 210M - 214M

approx. 210M - 214M

not provided

not provided



September quarter

approx. 233M - 237M

approx. 233M - 237M

not provided

not provided



December quarter

not provided

approx. 279M - 283M

not provided

not provided



Est. calendar year range (approx.)

915M - 940M

928M - 945M

1,000M - 1,070M

1,015M - 1,085M



Est. calendar year midpoint (approx.) (4)

928M

937M

1,035M

1,050M

(1)

Total reported device sales is the sum of all reported sales in U.S. dollars (as reported to us by our licensees) of all licensed CDMA-based, OFDMA-based and CDMA/OFDMA multimode subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period (collectively, 3G/4G devices).  The reported quarterly estimated ranges of average selling prices (ASPs) and unit shipments are determined based on the information as reported to us by our licensees during the relevant period and our own estimates of the selling prices and unit shipments for licensees that do not provide such information.  Not all licensees report sales, selling prices and/or unit shipments the same way (e.g., some licensees report selling prices net of permitted deductions, such as transportation, insurance and packing costs, while other licensees report selling prices and then identify the amount of permitted deductions in their reports), and the way in which licensees report such information may change from time to time.  Total reported device sales, estimated unit shipments and estimated ASPs for a particular period may include prior period activity that was not reported by the licensee until such particular period.



(2)

FY 2012 results for QSI and GAAP included $0.44 EPS related to a $1.2 billion gain associated with the sale of substantially all of our 700 MHz spectrum, which was recognized in discontinued operations and was excluded from Non-GAAP results.



(3)

FY 2013 guidance for tax items includes $0.04 EPS related to a tax benefit that resulted from the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012, which was excluded from Non-GAAP results.



(4)

The midpoints of the estimated calendar year ranges are identified for comparison purposes only and do not indicate a higher degree of confidence in the midpoints.




Sums may not equal totals due to rounding.

Results of Business Segments

The following table reconciles our Non-GAAP results to our GAAP results (in millions, except per share data):

SEGMENTS

QCT

QTL

QWI 

Non-GAAP Reconciling Items (1)

Non-GAAP (2)

QSI (2)


Share-Based
Compensation (2)

Acquisition- Related Items (2)

Tax Items

GAAP

Q2 - FISCAL 2013








Revenues 

$3,916

$2,057

$155

($4)

$6,124

$  -

$  -

$  -

$  -

$6,124

  Change from prior year

28%

19%

(3%)

N/M

24%





24%

  Change from prior quarter 

(5%)

17%

6%

20%

2%





2%

Operating income (loss)





$2,233

($5)

($268)

($83)

$  -

$1,877

  Change from prior year





18%

94%

(12%)

(46%)


24%

  Change from prior quarter 





(9%)

38%

5%

(19%)


(10%)

EBT

$681

$1,803

$  -

($30)

$2,454

$33

($268)

($83)

$  -

$2,136

  Change from prior year

14%

17%

N/M

N/M

15%

N/M

(12%)

(46%)


23%

  Change from prior quarter 

(36%)

18%

N/M

N/M

(9%)

N/M

5%

(19%)


(8%)

EBT as % of revenues

17%

88%

N/M

N/M

40%





35%

Net income (loss) 





$2,066

$36

($220)

($80)

$ 64

$1,866

  Change from prior year





17%

(95%)

(20%)

(54%)

N/A

(16%)

  Change from prior quarter 





(6%)

N/M

0%

(19%)

N/A

(2%)

Diluted EPS





$1.17

$0.02

($0.12)

($0.05)

$0.04

$1.06

  Change from prior year





16%

(95%)

(9%)

(67%)

N/A

(17%)

  Change from prior quarter 





(7%)

N/M

0%

(25%)

N/A

(3%)

Diluted shares used





1,763

1,763

1,763

1,763

1,763

1,763

Q1 - FISCAL 2013








Revenues 

$4,120

$1,757

$146

($5)

$6,018

$  -

$  -

$  -

$  -

$6,018

Operating income (loss)





2,447

(8)

(281)

(70)

-

2,088

EBT

$1,068

$1,532

($3)

$98

2,695

(17)

(281)

(70)

-

2,327

Net income (loss)





2,204

(12)

(219)

(67)

-

1,906

Diluted EPS





$1.26

($0.01)

($0.12)

($0.04)

$  -

$1.09

Diluted shares used





1,751

1,751

1,751

1,751

1,751

1,751

Q2 - FISCAL 2012








Revenues 

$3,059

$1,723

$159

$2

$4,943

$  -

$  -

$  -

$  -

$4,943

Operating income (loss)





1,900

(89)

(240)

(57)

-

1,514

EBT

$599

$1,540

($10)

$1

2,130

(99)

(240)

(57)

-

1,734

Discontinued operations, net of tax




-

761

-

-

-

761

Net income (loss)





1,759

707

(184)

(52)

-

2,230

Diluted EPS





$1.01

$0.41

($0.11)

($0.03)

$  -

$1.28

Diluted shares used





1,743

1,743

1,743

1,743

1,743

1,743

Q3 - FISCAL 2012








Revenues 

$2,869

$1,593

$160

$4

$4,626

$  -

$  -

$  -

$  -

$4,626

Operating income (loss)





1,718

(11)

(264)

(61)

-

1,382

EBT

$472

$1,407

($6)

$49

1,922

(16)

(264)

(61)

-

1,581

Discontinued operations, net of tax




-

(3)

-

-

-

(3)

Net income (loss)





1,486

(11)

(210)

(58)

-

1,207

Diluted EPS





$0.85

($0.01)

($0.12)

($0.03)

$  -

$0.69

Diluted shares used





1,758

1,758

1,758

1,758

1,758

1,758

 

SEGMENTS

QCT

QTL

QWI 

Non-GAAP Reconciling Items (1)

Non-GAAP (2)

QSI (2)


Share-Based
Compensation (2)

Acquisition- Related Items (2)

Tax Items

GAAP

6 MONTHS - FISCAL 2013









Revenues 

$8,036

$3,813

$301

($7)

$12,143

$  -

$  -

$  -

$  -

$12,143

  Change from prior year

31%

21%

(3%)

N/M

26%





26%

Operating income (loss)





$4,681

($12)

($549)

($154)

$  -

$3,966

  Change from prior year





24%

88%

(13%)

(32%)


29%

EBT

$1,749

$3,335

($4)

$70

$5,150

$16

($549)

($154)

$  -

$4,463

  Change from prior year

31%

19%

(56%)

27%

23%

N/M

(13%)

(32%)


29%

EBT as a % of revenues

22%

87%

N/M

N/M

42%





37%

Net income (loss) 





$4,270

$24

($439)

($147)

$ 64

$3,772

  Change from prior year





24%

(97%)

(16%)

(36%)

N/A

4%

Diluted EPS





$2.43

$0.01

($0.25)

($0.08)

$0.04

$2.15

  Change from prior year





23%

(98%)

(14%)

(33%)

N/A

2%

Diluted shares used





1,757

1,757

1,757

1,757

1,757

1,757

6 MONTHS - FISCAL 2012








Revenues 

$6,143

$3,162

$311

$9

$9,625

$  -

$  -

$  -

$  -

$9,625

Operating income (loss)





3,772

(102)

(487)

(117)

-

3,066

EBT

$1,338

$2,808

($9)

$55

4,192

(133)

(487)

(117)

-

3,455

Discontinued operations, net of tax




-

756

-

-

-

756

Net income (loss)





3,431

686

(378)

(108)

-

3,631

Diluted EPS





$1.98

$0.40

($0.22)

($0.06)

$  -

$2.10

Diluted shares used





1,732

1,732

1,732

1,732

1,732

1,732

12 MONTHS - FISCAL 2012








Revenues 

$12,141

$6,327

$633

$20

$19,121

$  -<