Qualcomm 2012 Annual Report Download - page 26

private and early-stage. Our strategic activities are focused on expanding the wireless industry and promoting the global adoption of CDMA,
OFDMA or other technologies and related services to enhance our stockholder value. Many of our acquisitions or strategic investments entail a
high degree of risk, and investments may not become liquid for several years after the date of the 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. In addition, we may record impairment charges related to our strategic investments or
other strategic assets, such as wireless spectrum and other intangible assets. Any losses or impairment charges that we incur related to strategic
investments or other transactions will have a negative impact on our financial results, and we may continue to incur new or additional losses
related to strategic assets or investments that we have not fully impaired or exited.
Achieving the anticipated benefits of business acquisitions 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 or become subject to litigation. 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 of 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 not achieve
them. If we do not achieve the anticipated benefits of business acquisitions, our results of operations may be adversely affected, and we may not
enhance stockholder value by engaging in these transactions.
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 next generation IMOD display technology will offer compelling advantages to users of
displays, other technologies may continue to improve in ways that reduce the advantages we anticipate. 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,
numerous companies have started investing in another flat panel display technology called organic light-emitting diode (OLED), which provides
comparable performance to high end LCDs. In each case, advances in LCD or other flat panel display technologies, such as OLED, 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 or continuing licensing and/or commercial
relationships with us.
During fiscal 2012, we updated the business plan and related internal forecasts for our QMT division to reflect a focus on licensing our next
generation IMOD display technology while directly commercializing only certain IMOD products. We may not evolve our QMT division into a
successful licensing business or IMOD product supplier if we are unable to develop our IMOD display technology to meet market demands or to
cost-effectively manufacture and commercialize our IMOD products, among other factors. In addition, we have limited experience
commercializing IMOD products, and we may be unsuccessful in selling such products. Our QMT division had $1.2 billion in assets (including
$136 million in goodwill) at September 30, 2012. If we do not expect to achieve or do not achieve the cash flows anticipated in QMT’s business
plan, 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 each of the last three fiscal years. Adverse movements in currency
exchange rates may negatively affect our business and our operating results due to a number of factors, including, 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;
• Certain of our revenues, such as royalties, that are derived from licensee or customer sales that are denominated in foreign currencies
could decrease;