Qualcomm 2011 Annual Report Download - page 24

strategic investments entail a high degree of risk and will not become liquid until more than one year from the date of investment, if at all. Our
acquisitions or strategic investments (either those we have completed or may undertake in the future) may not generate financial returns or result
in increased adoption or continued use of our technologies. In some cases, we may be required to consolidate or record our share of the earnings
or losses of companies in which we have acquired ownership interests. Our share of any losses will adversely affect our financial results until we
exit from or reduce our exposure to these investments.
Achieving the anticipated benefits of business acquisitions, such as our recent acquisition of Atheros, depends in part upon our ability to
integrate the acquired businesses in an efficient and effective manner. The integration of companies that have previously operated independently
may result in significant challenges, including, among others: retaining key employees; successfully integrating new employees, business
systems and technology; retaining customers and suppliers of the acquired business; minimizing the diversion of management’s attention from
ongoing business matters; coordinating geographically separate organizations; consolidating research and development operations; and
consolidating corporate and administrative infrastructures. We may not derive any commercial value from acquired technology, products and
intellectual property or from future technologies and products based on the acquired technology and/or intellectual property, and we may be
subject to liabilities that are not covered by indemnification protection we may obtain. Additionally, we may not be successful in expanding into
geographic regions and/or categories of products served by or adjacent to an acquired business and in addressing potential new opportunities that
may arise out of the combination. Due to our inexperience with products and/or geographic regions served by acquired businesses, we may
overestimate the benefits, including product and other synergies and growth opportunities that we expect to realize, and we may fail to achieve
them. For example, Atheros’ business has focused on LAN connectivity and products for WLAN (also referred to as WiFi) and other
technologies primarily for networking, computing and other consumer electronic devices. We may not realize the expected return on our
investment in Atheros if we do not effectively execute upon the product and business strategies and/or other opportunities created by the
acquisition.
Our QMT division ’ s business does not currently generate operating income and may not succeed or its operating results may not meet our
expectations.
While we continue to believe our QMT division’s IMOD displays will offer compelling advantages to users of displays, other technologies
may continue to improve in ways that reduce the advantages we anticipate from our IMOD displays. Sales of flat panel displays are currently
dominated, and we believe will likely continue to be dominated for some time, by displays based on liquid crystal display (LCD) technology.
Numerous companies are making substantial investments in, and conducting research to improve characteristics of, LCDs. Additionally, several
other flat panel display technologies have been, or are being, developed, including technologies for the production of organic light-emitting
diode (OLED), field emission, inorganic electroluminescence, gas plasma and vacuum fluorescent displays. In each case, advances in LCD or
other flat panel display technologies could result in technologies that are more cost effective, have fewer display limitations or can be brought to
market faster than our IMOD technology. These advances in competing technologies might cause device manufacturers to avoid entering into
commercial relationships with us or to not renew planned or existing relationships with us.
We may not evolve our QMT division into a successful display-based subsystem provider if we are unable to cost-effectively manufacture
and commercialize our IMOD display product. We are constructing a new facility in Taiwan to manufacture our IMOD display product. We may
experience unforeseen difficulties, delays or defects upon volume production and broad deployment of this product. Delays in the commercial
launch of our IMOD display product could result from delays in facility construction, delivery of specialized test equipment and numerous other
factors. In addition, we have limited experience in the display business, and we may be unsuccessful in selling our IMOD display product. Our
QMT division had $806 million in assets (including $136 million in goodwill) at September 25, 2011 . If we do not expect to achieve or do not
achieve adequate market penetration with our IMOD display technology, our assets may become impaired, negatively impacting our operating
results, and we may not meet future earnings projections related to this business.
Currency fluctuations could negatively affect future product sales or royalty revenues, harm our ability to collect receivables or increase the
U.S. dollar cost of the activities of our foreign subsidiaries and international strategic investments.
Our international customers sell their products throughout the world in various currencies. Consolidated revenues from international
customers as a percentage of total revenues were greater than 90% in the last three fiscal years. We are exposed to risk from fluctuations in
currencies that could negatively affect our operating results. Adverse movements in currency exchange rates may negatively affect our business
due to a number of situations, including the following, among others:
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• Our products and those of our customers and licensees that are sold outside the United States may become less price-competitive as a
result of adverse currency fluctuations;
• Certain of our revenues, such as royalties, are derived from licensee or customer sales that are denominated in foreign currencies.
Weakening of currency values versus the U.S. dollar in selected regions could reduce our revenues and cash flows;
• We may engage in foreign exchange hedging transactions that could affect our cash flows and results of operations