Qualcomm’s (QCOM) CEO Steve Mollenkopf on Q3 2014 Results – Earnings Call Transcript

Source: Seeking Alpha


Qualcomm Inc. (NASDAQ:QCOM)

F3Q 2014 Earnings Conference Call

July 23, 2014 5:45 PM ET


Warren Kneeshaw – Investor Relations

Steve Mollenkopf – CEO

Derek Aberle – President

George Davis – EVP and CFO


Mike Walkley – Canaccord Genuity

Tim Long – BMO Capital Markets

Brian Modoff – Deutsche Bank

Kulbinder Garcha – Credit Suisse

Simona Jankowski – Goldman Sachs

Ehud Gelblum – Citigroup

James Faucette – Morgan Stanley

Stacy Rasgon – Sanford Bernstein

Romit Shah – Nomura

Timothy Arcuri – Cowen and Company

Tal Liani – Bank of America Merrill Lynch

Mark Sue – RBC Capital Markets

Rod Hall – JP Morgan

Anil Doradla – William Blair


Welcome to the Qualcomm Third Quarter Fiscal 2014 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded July 23, 2014. The playback number for today’s call is 855-859-2056. International callers, please dial 404-537-3406. The playback reservation number is 63935250.

I would now like to turn the call over to Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.

Warren Kneeshaw – Investor Relations

Thank you, Brent, and good afternoon everyone. Today’s call will include prepared remarks by Steve Mollenkopf, Derek Aberle, and George Davis. Steve is joining us from Beijing, where he is attending the U.S.-China CEO dialog, co-convened by the U.S. Chamber of Commerce and the China Center for Economic Exchanges. Murthy Renduchintala and Don Rosenberg will join the question-and-answer session.

An Internet presentation and audio broadcast is accompanying this call and you can access them by visiting our web site at www.qualcomm.com.

During this conference call, if we use non-GAAP financial measures as defined in Regulation G, you can find the related reconciliations to GAAP on our website. I’d also like to direct you to our 10-Q and earnings release, which were filed and furnished respectively with the SEC today and are available on our web site.

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During this conference call, we will make forward-looking statements regarding future events or company results. Actual events or results could differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recent Form 10-Q, which contains important factors that could cause actual results to differ materially from the forward-looking statements.

And now, I would like to introduce Qualcomm’s Chief Executive Officer, Steve Mollenkopf.

Steve Mollenkopf – CEO

Thank you, Warren, and good afternoon everyone. We are pleased to report another very strong quarter, with record revenues and earnings per share, driven by broad-based demand for our 3G and multimode 3G/4G chipsets. In QCT, we shipped a record 225 million MSM chipsets, well ahead of expectations, driven primarily by strength in emerging regions.

We continue to benefit from our tiered roadmap and diversified customer base, as revenues in MSM chip shipments were up 17% and 31% year-over-year respectively. Total 3G/4G device demand in the March quarter, was stronger than our expectations. However, QTL total reported device sales and revenues were down from our prior guidance expectations, as a result of a dispute with the licensee. Under reporting by certain licensees, in China, and sales of certain unlicensed devices in China. Derek will discuss this more fully, including the actions we are taking to address this situation. We will also give a brief update on the ongoing NDRC investigation.

We began the year with several key objectives; first, we set out to compete effectively across all tiers in the LTE rollout in China, while driving the modem and AP roadmap to maintain our competitive lead. Second, we have developed plans to focus our investments on adjacent opportunities, that adopt our core technologies, as well as technologies that address the 1000X data challenge, and drive IOE adoption.

Third, we set challenging OpEx targets to achieve greater operating leverage from our scale, and finally, we committed to materially increase our return of capital. As I will explain further, I am very pleased with our results to date on all of these elements.

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I will begin with the operational front, where we are executing against our initiatives to drive productivity. We remain committed to exiting our fiscal year at an overall operating expense run rate lower than our exit from last year. Our team is executing to this, while making critical investments in our roadmap and supply chain initiatives. We also continue to make progress on our efforts to focus our new business initiatives across the company.

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