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Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations
In addition to historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties.
Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks described in the
section entitled Risk Factors and elsewhere in this Annual Report.
Overview
Recent Developments
Revenues for fiscal 2011 were $15.0 billion, with net income of $4.3 billion, whi ch were impacted by the following key items:
Against this backdrop, the following recent developments occurred during fiscal 2011 with respect to key elements of our business or our
industry:
Our Business and Operating Segments
We design, manufacture, have manufactured on our behalf and market digital communications products and services based on CDMA,
OFDMA and other technologies. We derive revenues principally from sales of integrated circuit products, fixed license fees (payable in one or
more installments) and ongoing royalties for use of our intellectual property, messaging and other services and related hardware sales, software
development and licensing and related services and software hosting services. Operating expenses primarily consist of cost of equipment and
services, research and development and selling,
30
• We shipped approximately 483 million Mobile Station Modem (MSM) integrated circuits for CDMA- and OFDMA-based wireless
devices, an increase of 21%, compared to approximately 399 million MSM integrated circuits in fiscal 2010 .
(1)
• Total reported device sales were approximately $149.5 billion, an increase of approximately 41%, compared to approximately
$105.7 billion in fiscal 2010 .
(2)
• On May 24, 2011, we acquired Atheros Communications, Inc., which was renamed Qualcomm Atheros, Inc. (Atheros), for total cash
consideration of $3.1 billion, net of cash acquired, and the exchange of equity awards. Atheros was integrated into the Qualcomm
CDMA Technologies (QCT) segment.
• We executed a restructuring plan under which the FLO TV business and network were shut down, and we are no longer pursing our
MediaFLO technologies business. We recorded net restructuring and restructuring-related charges of $358 million in fiscal 2011. Our
results of operations reflect the presentation of the FLO TV business as discontinued operations, and all prior period amounts have been
adjusted accordingly.
• Worldwide wireless connections grew by approximately 14% to reach approximately 5.9 billion.
(3)
• Worldwide 3G connections (all CDMA-based) grew to approximately 1.5 billion, approximately 25% of total wireless connections,
including approximately 536 million CDMA2000 1X/1xEV-DO connections and approximately 951 million WCDMA/HSPA/TD-
SCDMA connections.
(3)
• Unit shipments of CDMA-based handsets grew an estimated 28% year-over-year, compared to an estimated increase of 12% year-over-
year across all wireless technologies.
(4)
(1)
During fiscal 2011, some customers built devices that incorporated two MSMs. In such cases, which represent less than 1% of our gross
volume, we count only one MSM in reporting the MSM shipments.
(2)
Total reported device sales is the sum of all reported sales in U.S. dollars (as reported to us by our licensees) of all licensed CDMA-based
subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period. Not
all licensees report sales the same way (e.g., some licensees report sales net of permitted deductions, such as transportation, insurance and
packing costs, while other licensees report sales and then identify the amount of permitted deductions in their reports), and the way in which
licensees report such information may change from time to time. Total reported device sales for a particular period may include prior period
activity that was not reported by the licensee until such particular period.
(3)
According to Wireless Intelligence estimates as of October 31, 2011, for the quarter ending September 30, 2011. Wireless Intelligence
estimates for CDMA2000 1X/1xEV-DO connections do not include Wireless Local Loop.
(4)
Based on current reports by Strategy Analytics, a global research and consulting firm, in their August 2011 Global Handset Market Share
Update.