Qualcomm Inc QCOM
Q4 2013 Earnings Call Transcript

Transcript Call Date 11/06/2013

We made excellent strategic and operational progress this year. We delivered our industry-leading third-generation 3G LTE multimode modem, grew our share of semiconductor content in a wide array of devices and expanded our Licensing program. Further, our strategy to support the LTE TDD migration path for the wireless operators in India was successfully executed. We just completed the final step in transferring full ownership of the Indian BWA entity that holds the 4G spectrum we won in the 2010 spectrum auction to Bharti.

We also announced the planned divesture of Omnitracs. As you know, Omnitracs was one of our first businesses and helped fund our investment in CDMA. I'd really like to thank all the employees, suppliers and customers who helped contribute to the more than 25 years success of the business. We really look forward to hearing about your future accomplishments. We expect that transaction to be completed during our first fiscal quarter of 2014. While we haven't included the estimated $0.22 to $0.25 per share gain on the sale in either our first fiscal quarter or annual guidance.

Looking at the fiscal 2014, we are expecting solid growth but at a lower rate than what we delivered in the last few years. This is partially due to the exceptionally strong year we just completed which included share gains and content share gains in QCT. In fiscal 2014 we are facing some mix and demand factors which we currently expect will moderate our QCT growth. In light of this we are taking near term actions Company-wide to prioritize investments, stay focused on growth but also control expenses in order to deliver operating profit growth in excess of revenue growth.

Fundamentally we believe our long term growth drivers remain very much intact and we are aligning our resources to continue to capture those opportunities. We continue to see smartphone adoption grow at a rapid pace across the globe. According to Gartner approximately 225 million smartphones were shipped in the second quarter of calendar 2013 representing a 47% year-over-year increase. This is especially true in emerging regions where smartphone demand is being driven in part by the migration from 2G to 3G. Looking forward Gartner is now expecting 1.8 billion smartphones will be shipped in 2017.

In the September quarter we saw the launch of new devices with expanded capabilities based on QUALCOMM products. Some of these new capabilities include the launch of Ultra-HD video, LTE carrier aggregation and support for additional frequency bands for global roaming. We will continue to focus on expanding our share of content and devices and making good progress with our Wi-Fi and RF front-end solutions. We see multi-mode 3G LTE as a catalyst for growth in network enhancements and smartphone demand.

Going to GSMA Intelligence, approximately 100 million new LTE connections are expected to be added in calendar year 2013, representing a 57% year-over-year increase from 2012, and it is approximately 22% of total net new connections.

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