Qualcomm 2011 Annual Report Download - page 37

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other product initiatives.
Discontinued Operations
On December 20, 2010, we agreed to sell substantially all of our 700 MHz spectrum for $1.9 billion, subject to the satisfaction of customary
closing conditions, including approval by the U.S. Federal Communications Commission (FCC). The agreement terminates on January 13, 2012;
however, either party can extend the agreement for another 90 days thereafter if the FCC approval has not been received by then. The agreement
followed our previously announced plan to restructure and evaluate strategic options related to the FLO TV business and network. The FLO TV
business and network were shut down on March 27, 2011. Since then, we have been working to sell the remaining assets and exit contracts. The
700 MHz spectrum with a carrying value of $746 million that we have agreed to sell was classified as held for sale, and all other assets were
considered disposed of, at September 25, 2011 . Accordingly, the results of operations of the FLO TV business were presented as discontinued
operations at September 25, 2011 . Loss from discontinued operations includes share-based payments and excludes certain general corporate
expenses allocated to the FLO TV business during the periods presented. Our statements of operations for all prior periods have been adjusted to
conform.
Summarized results from discontinued operations were as follows (in millions):
Restructuring and restructuring-
related activities under our plan related to discontinued operations were initiated in the fourth quarter of fiscal
2010 and are expected to be substantially complete by the end of fiscal 2012 as we continue to negotiate the exit of certain contracts and remove
certain of our equipment from the network sites. During fiscal 2011 , we recorded $300 million in restructuring-related charges, primarily
consisting of asset impairments and accelerated depreciation, and net restructuring charges of $58 million , including $48 million in contract
termination costs. We estimate that we will incur future restructuring and restructuring-related charges of up to $25 million , primarily related to
lease exit costs. We may also realize certain gains, primarily due to the potential release of liabilities associated with ongoing efforts to exit
certain contracts, the amount of which cannot be reasonably estimated at this time. Future cash expenditures are expected to be in the range of
$75 million to $115 million .
Looking Forward
The deployment of 3G networks enables increased voice capacity and higher data rates than prior generation networks, thereby supporting
more minutes of use and a wide range of mobile broadband data applications for handsets, 3G connected computing devices and other consumer
electronics. Many wireless operators have or are planning to complement their existing 3G networks by deploying OFDMA-based technology,
often called 4G, in new spectrum to gain additional capacity for data services. As a result, we expect continued growth in the coming years in
consumer demand for 3G and 3G/4G multimode products and services around the world. In addition, we expect an increasing number of
devices, such as computers, consumer electronics and networking equipment, to require multiple communications technologies to support a
variety of connected applications.
As we look forward to the next several months, the following items are likely to have an impact on our business:
32
Year Ended
September 25,
2011
September 26,
2010
September 27,
2009
Revenues
$
5
$
9
$
29
Loss from discontinued operations
(507
)
(459
)
(327
)
Income tax benefit
194
186
127
Discontinued operations, net of income taxes
$
(313
)
$
(273
)
$
(200
)
• The worldwide transition from 2G to 3G CDMA-based networks is expected to continue, including the further expansion of 3G in
China, India and other emerging regions.
• We expect consumer demand for advanced 3G-based and 3G/4G multimode devices, including smartphones and data-centric devices,
such as tablets and e-readers, to continue at a strong pace. We also expect growth in lower-end 3G devices as 3G expands in emerging
regions.
• We expect that CDMA-based device prices will continue to vary broadly due to the increased penetration of smartphones combined
with active competition throughout the world at all price tiers. This, along with varying rates of economic growth by region and
stronger than average growth in emerging regions, is expected to continue to impact the average and range of selling prices of CDMA-
based devices.
• We continue to invest significant resources toward the development of technologies and products for voice and data communications,
primarily in the wireless industry, including advancements to 3G CDMA and 4G LTE networks,