Qualcomm 2004 Annual Report Download - page 6

MOBILE฀DATA฀USAGE฀IS฀ACCELERATING
Our฀chipsets฀support฀access฀to฀QUALCOMM’s฀Binary฀
Runtime฀Environment฀for฀Wireless®฀(BREW®)฀solution,฀
which฀enables฀the฀development,฀delivery฀and฀monetiza-
tion฀of฀advanced฀applications฀and฀content,฀allowing฀
operators฀and฀original฀equipment฀manufacturers฀(OEMs)฀
to฀differentiate฀their฀products฀and฀services฀and฀increase฀
revenues.฀The฀combination฀of฀high-speed฀networks฀฀
and฀BREW-enabled฀devices฀is฀helping฀spur฀increasing฀
demand฀for฀mobile฀data฀services.฀More฀than฀200฀million฀
downloads฀of฀BREW-based฀applications฀have฀now฀been฀
logged฀and฀BREW฀application฀publishers฀and฀developers฀
are฀benefiting฀from฀increasing฀revenues.฀
A฀notable฀success฀story฀this฀year฀was฀the฀initial฀public฀
offering฀of฀JAMDAT®฀Mobile,฀Inc.฀A฀global฀publisher฀of฀
wireless฀entertainment฀applications,฀JAMDAT฀credited฀
its฀growth฀in฀part฀to฀the฀strength฀of฀the฀BREW฀solution.฀
The฀wireless฀games฀market฀served฀by฀JAMDAT฀and฀
others฀is฀a฀growth฀industry.฀Analysts฀predict฀that฀global฀
wireless฀game฀revenues฀will฀grow฀to฀$8.4฀billion฀and฀
total฀wireless฀data฀revenues฀are฀expected฀to฀increase฀to฀
over฀$140฀billion฀by฀2008,฀representing฀a฀compound฀
annual฀growth฀rate฀of฀49฀percent.฀We฀expect฀3G฀mobile฀
handsets฀and฀BREW฀to฀become฀a฀major฀platform฀in฀฀
this฀segment.3
Our฀revenues,฀earnings฀and฀operating฀cash฀flow฀growth฀
this฀year฀exceeded฀the฀high฀end฀of฀our฀estimates,฀due฀฀
in฀part฀to฀the฀popularity฀of฀devices฀that฀take฀advantage฀
of฀3G฀features฀and฀capabilities,฀such฀as฀high-quality฀
color฀screens,฀camera฀phones,฀position฀location฀and฀
multimedia฀services.฀We฀estimate฀that฀approximately฀
170฀million฀CDMA-enabled฀devices฀were฀sold฀by฀manu-
facturers฀worldwide฀in฀calendar฀2004,฀a฀45%฀increase฀
over฀the฀previous฀year.฀In฀calendar฀2004,฀we฀saw฀
unprecedented฀demand฀for฀our฀chipsets,฀which฀led฀to฀
shortages฀in฀certain฀components.฀To฀put฀this฀demand฀
into฀perspective,฀in฀fiscal฀year฀2002,฀we฀shipped฀
approximately฀65฀million฀MSM฀(Mobile฀Station฀Modem)฀
chips.฀Comparatively,฀in฀fiscal฀year฀2004,฀we฀more฀than฀
doubled฀MSM฀shipments฀to฀approximately฀137฀million฀
chips.฀To฀accommodate฀the฀upsurge฀in฀demand฀and฀
ensure฀future฀product฀supply,฀we฀have฀made฀several฀฀
key฀improvements฀in฀our฀supply฀chain฀and฀operational฀
processes.฀Additionally,฀we฀have฀invested฀in฀long-term฀
capacity฀agreements฀which฀have฀enabled฀our฀supply฀
chain฀partners฀to฀significantly฀increase฀and฀secure฀
production฀capacity฀on฀our฀behalf.฀In฀addition฀to฀our฀
core฀software฀and฀hardware฀engineering฀base฀in฀San฀
Diego,฀we฀added฀engineering฀teams฀in฀North฀Carolina,฀
Texas,฀Germany,฀India฀and฀the฀United฀Kingdom.฀These฀
new฀groups฀will฀help฀us฀to฀continue฀to฀provide฀complete฀
system฀solutions฀to฀an฀expanding฀customer฀base฀and฀
worldwide฀marketplace.
02฀฀QUALCOMM฀฀฀฀฀฀฀
QUALCOMM’s฀฀
performance฀this฀฀
year฀was฀greatly฀aided฀
by฀the฀faster฀than฀
anticipated฀adoption฀฀
of฀WCDMA.
Letter฀to฀Stockholders
$100
80
40
20
10
1
2
4
8
$0.5
QUALCOMM Stock Price Since Initial Public Offering (IPO) (price per share weekly)
Adjusted for historical stock splits*
Over 41% growth
Compounded Annually
Market Cap $66B
11/12/2004
0492 93 94 95 96 97 98 99 00 01 02 03
IPO $0.5
12/13/1991
*฀FactSet฀Research฀Systems,฀November฀2004
฀3฀Source:฀JAMDAT฀S1-A฀as฀filed฀with฀the฀Securities฀and฀Exchange฀Commission฀on฀September฀24,฀2004.฀Yankee฀Group฀2004.