Qualcomm 2011 Annual Report Download - page 23

portfolio of marketable securities. Net investment income could vary depending on the gains or losses realized on the sale or exchange of
securities, impairment charges related to marketable securities and other investments, changes in interest rates and changes in fair values of
derivative instruments.
These factors affecting our future earnings are difficult to forecast and could harm our quarterly and/or annual operating results. If our
earnings fail to meet the financial guidance we provide to investors, or the expectations of investment analysts or investors in any period,
securities class action litigation could be brought against us and/or the market price of our common stock could decline.
We depend on a limited number of third-party suppliers for our procurement, manufacture and testing of product inventories. If these third-
party suppliers fail to meet our needs, or if there are any disruptions in the operations of, or a loss of, any of these third
-party suppliers, it
could harm our ability to meet our delivery obligations to our customers, reduce our revenues, increase our cost of sales and harm our
business.
We purchase raw materials, component parts, subassemblies and specialized manufacturing equipment from our suppliers and contract with
separate suppliers for probe, assembly, test and other services in the manufacture of our product inventories. A reduction, interruption or delay in
our product supply source, a failure by our suppliers to allocate adequate manufacturing or test capacity to our products or their inability to react
to shifts in product demand or an increase in raw material or component prices could have an adverse effect on our ability to meet customer
demands, our business and/or our profitability. The loss of a significant supplier or the inability of a supplier to meet performance and quality
specifications or delivery schedules could harm our ability to meet our delivery obligations to our customers and negatively impact our revenues
and business operations. In the event of a loss of, or a decision to change, a supplier, qualifying a new foundry supplier and commencing volume
production or testing could cause us to incur additional expense and production delays, resulting in possible loss of customers.
While our goal is to establish alternate suppliers for technologies that we consider critical, we rely on sole- or limited-source suppliers for
some products, subjecting us to significant risks, including: possible shortages of raw materials or manufacturing capacity; poor product
performance; and reduced control over delivery schedules, manufacturing capability and yields, quality assurance, quantity and costs. Our
arrangements with our suppliers may oblige us to incur costs to manufacture and test our products that do not decrease at the same rate as
decreases in pricing to our customers.
QCT Segment. Although we have entered into long-term contracts with our suppliers, these contracts generally do not provide for long-
term
capacity commitments, except as may be provided in a particular purchase order that has been accepted by our supplier. To the extent that we do
not have firm commitments from our suppliers over a specific time period, or for any specific quantity, our suppliers may allocate, and in the
past have allocated, capacity to the production and testing of products for their other customers while reducing capacity to manufacture or test
our products. Accordingly, capacity for our products may not be available when we need it or available at reasonable prices. We have
experienced capacity limitations from our suppliers, which resulted in supply constraints and our inability to meet certain customer demand. The
timely readiness of our foundry suppliers to support transitions to smaller geometry process technologies could also impact our ability to meet
customer demand and may subject us to the risk of excess inventories. If we experience these or other supply constraints in the future, we may
not be able to meet customer demand, and our revenues and results of operations could suffer.
QMT Division. Our QMT division needs to further develop its business relationships with raw materials and component supply partners to
support the manufacture of IMOD displays and/or modules in commercial volumes. We depend on certain raw materials, components, and
specialized manufacturing equipment, primarily from suppliers in Taiwan, Japan and South Korea, to produce our IMOD display panels, and we
may not be able to obtain sufficient quantities and acceptable quality of raw materials, components and equipment in the future to support
commercial production. The effect of these supplier-related risks could negatively impact the adoption of the IMOD technology.
Our suppliers may also be our competitors, putting us at a disadvantage for pricing and capacity allocation.
One or more of our suppliers may obtain rights from us to manufacture CDMA- or OFDMA-based integrated circuits that compete with our
products. In this event, the supplier could elect to allocate raw materials and manufacturing capacity to their own products and reduce deliveries
to us to our detriment. In addition, we may not receive reasonable pricing, manufacturing or delivery terms. We cannot guarantee that the actions
of our suppliers will not cause disruptions in our operations that could harm our ability to meet our delivery obligations to our customers or
increase our cost of sales.
We may engage in acquisitions or strategic transactions or make investments that could result in significant changes or management
disruption and fail to enhance stockholder value.
From time to time, we engage in acquisitions or strategic transactions or make investments with the goal of maximizing stockholder value.
We acquire businesses and other assets, including spectrum licenses and other intangible assets, enter into joint ventures or other strategic
transactions and purchase equity and debt securities, including minority interests in publicly-
traded and private companies. Many of our strategic
investments are in early-stage companies to expand the wireless industry and promote the global adoption of CDMA- or OFDMA-based
technologies and related services. Most of our acquisitions or
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