Qualcomm Q2 2013 Earnings Skyrocket Thanks To Mobile Market

http://www.qualcomm.com/media/releases/2013/04/04/qualcomm-technologies-inc-extends-collaboration-facebook-enhance

Qualcomm is profiting handsomely from the uptick in smartphone sales over the last year, reporting a revenue jump of 24 percent from its Q2 2013 earnings report which was posted today. Qualcomm reported a cool $6.12 billion in revenue, compared to $4.94 billion from the same quarter of 2012. Qualcomm’s net profit grew at a rate of 17 percent, climbing to $2.07 billion.

Qualcomm’s chips currently power a slew of devices, most notably the new Samsung Galaxy S4, the HTC One and the HTC First. Qualcomm’s chips can also be found in the Sony Xperia Z, Xperia ZL, as well as the BlackBerry Z10 and Q1o.

So far, Qualcomm has shipped over 173 million of its MSM chips, and expects the numbers to keep growing. Qualcomm is expecting its third quarter revenues to rise by 25% to 36% year over year , which could very well happen with some of the hottest smartphones touting Qualcomm’s chips.

Official press release follows below.

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

MSM™ chip 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.
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
$ –
$ –
$ –
$ –
$19,121
Operating income (loss)
7,100
(116)
(1,035)
(267)

5,682
EBT
$2,296
$5,585
($15)
$168
8,034
(170)
(1,035)
(267)

6,562
Discontinued operations, net of tax

777
(1)


776
Net income (loss)
6,463
690
(811)
(243)
10
6,109
Diluted EPS
$3.71
$0.40
($0.47)
($0.14)
$0.01
$3.51
Diluted shares used
1,741
1,741
1,741
1,741
1,741
1,741
(1)
Non-GAAP reconciling items related to revenues consist primarily of nonreportable segment revenues less intersegment eliminations. Non-GAAP reconciling items related to earnings before taxes consist primarily of certain costs of equipment and services revenues, research and development expenses, sales and marketing expenses, other operating expenses and certain investment income or losses and interest expense that are not allocated to the segments for management reporting purposes; nonreportable segment results; and the elimination of intersegment profit.
(2)
At fiscal year end, the sum of the quarterly tax provision (benefit) for each column equals the annual tax provision (benefit) for each column computed in accordance with GAAP. In interim quarters, the sum of these provisions (benefits) may not equal the total GAAP tax provision, and this difference is allocated to tax provisions (benefits) among the columns.
N/M – Not Meaningful
N/A – Not Applicable
Sums may not equal totals due to rounding.

[Via: Engadget]

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