Qualcomm 2012 Annual Report Download - page 36

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 2012 were $19.1 billion, with net income of $6.1 billion, whi ch were impacted by the following key items:
Against this backdrop, the following recent developments occurred during fiscal 2012 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, and fees for 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 revenues and research and development and selling, general and administrative expenses.
We conduct business primarily through four reportable segments: QCT, QTL, QWI and QSI.
QCT is a leading developer and supplier of integrated circuits and system software based on CDMA, OFDMA and other technologies for use
in voice and data communications, networking, application processing, multimedia and global positioning system products. QCT’s integrated
circuit products and system software are sold to or licensed to manufacturers that use our products in wireless devices, particularly mobile
phones, tablets, laptops, data modules, handheld wireless computers and gaming devices, access points and routers, data cards and infrastructure
equipment, and in wired devices, particularly broadband gateway equipment, desktop computers, televisions and Blu-ray players. The MSM
integrated circuits, which include the Mobile Data Modem, Qualcomm Single Chip and Qualcomm Snapdragon processor-based devices,
perform the core baseband modem functionality in wireless devices providing voice and data communications, as well as multimedia
applications and global positioning functions. In addition, our Snapdragon processors provide advanced application and
30
• We shipped approximately 590 million Mobile Station Modem (MSM) integrated circuits for CDMA- and OFDMA-based wireless
devices, an increase of 22 %, compared to approximately 483 million MSM integrated circuits in fiscal 2011 .
(1)
• Total reported device sales were approximately $187.3 billion , an increase of approximately 25 %, compared to approximately
$149.5 billion in fiscal 2011 .
(2)
• On December 27, 2011, we completed the sale of substantially all of our 700 MHz spectrum for $1.9 billion, and as a result, we
recognized a gain in discontinued operations of $1.2 billion during the second quarter of fiscal 2012.
• Worldwide wireless connections grew by approximately 9% to reach approximately 6.4 billion.
(3)
• Worldwide 3G connections (all CDMA-based) grew by approximately 24% to approximately 1.8 billion, which was approximately
29% of total wireless subscriptions, including approximately 552 million CDMA2000 1X/1xEV-DO subscriptions and approximately
1.3 billion WCDMA/HSPA/TD-SCDMA subscriptions.
(3)
(1) Some customers built devices that incorporated two MSM integrated circuits. In such cases, which represent approximately 1% of our gross volume, we
count only one MSM integrated circuit in reporting the MSM integrated circuit 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, OFDMA-based
and multimode CDMA/OFDMA subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a
particular period (collectively, 3G/4G devices). 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 November 5, 2012, for the quarter ending September 30, 2012. Wireless Intelligence estimates for
CDMA2000 1X/1xEV-DO connections do not include Wireless Local Loop.