Qualcomm 2014 Annual Report Download - page 38

3G/LTE and Wi-Fi products designed for implementation of small mobile base stations (known as small cells). Other nonreportable segments
develop and offer products and services that include, but are not limited to: software products and content and push-to-talk enablement services
to wireless operators; development, other services and related products to U.S. government agencies and their contractors; device-to-device
communication, including software for the connected home; data center products; medical device connectivity and related data management; and
augmented reality.
During fiscal 2014 , we updated QMT’s business plans and related internal forecasts to reflect decreases in expected cash flows. As a result
of these updates, we tested the QMT division’s long-lived assets and goodwill for impairment and recorded total charges of $607 million
in other
expenses in fiscal 2014.
Discontinued Operations
On November 25, 2013, we completed the sale of the North and Latin America operations of our Omnitracs division to a U.S.-based private
equity firm for cash consideration of $788 million (net of cash sold). As a result, we recorded a gain in discontinued operations of $665 million
( $430 million net of income tax expense) during fiscal 2014. Total assets and total liabilities were reduced by $150 million and $45 million ,
respectively. The revenues and operating results of the North and Latin America operations of the Omnitracs division, which comprised
substantially all of the Omnitracs division, were not presented as discontinued operations in any fiscal period because they were immaterial. The
related assets (included in other current assets and other noncurrent assets) and liabilities (included in other current liabilities and other
noncurrent liabilities) of $139 million and $43 million , respectively, were classified as held for sale at September 29, 2013.
On March 27, 2011, the FLO TV business and network were shut down. 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 fiscal 2012 .
Accordingly, the results of operations of the FLO TV business were presented as discontinued operations. Income (loss) from discontinued
operations included share-based compensation and excluded certain general corporate expenses allocated to the FLO TV business during the
periods presented. Discontinued operations in fiscal 2012 were $1.2 billion ( $776 million net of income tax expense).
Looking Forward
We expect continued growth in the coming years in consumer demand for 3G, 3G/4G multimode and 4G products and services around the
world, driven primarily by smartphones. We also expect growth in new device categories and industries, driven by the expanding adoption of
certain technologies that are already commonly used in smartphones. As we look forward to the next several months, we expect our business to
be impacted by the following key items:
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• Further expansion of 3G and 3G/4G multimode in emerging regions, particularly in China. We expect that the increased availability of
low-tier 3G/4G smartphone products will help enable such expansion.
• We expect that 3G/4G device prices will continue to vary broadly due to the increased penetration of smartphones combined with
competition throughout the world at all price tiers. Additionally, varying rates of economic growth by region, and stronger growth of
device shipments in emerging regions as compared to developed regions, are expected to continue to impact the average and range of
selling prices of 3G/4G devices.
•
China continues to present significant opportunities for us, particularly with the rollout of 3G/4G LTE multimode. We expect the rollout
of 4G services in China will encourage competition and growth, bring the benefits of 3G/4G LTE multimode to consumers, encourage
consumers to replace 2G (GSM) and 3G devices and enable new opportunities (e.g., machine-to-machine) for the industry.
• China also presents significant challenges, as our business practices continue to be the subject of an investigation by the China National
Development and Reform Commission (NDRC). We also believe that certain licensees in China currently are not fully complying with
their contractual obligations to report their sales of licensed products to us (which includes certain licensees underreporting a portion of
their 3G/4G device sales and a dispute with a licensee) and that unlicensed companies may seek to delay execution of new licenses
while the NDRC investigation is ongoing. Litigation and/or other actions may be necessary to compel these licensees to report such
sales and pay the required royalties for such sales and unlicensed companies to execute new licenses. Further, our success in China is in
part dependent upon the rate of commercialization of 4G LTE products in China.
• We continue to invest significant resources toward advancements in 3G, 3G/4G multimode and 4G LTE (an OFDMA-based standard)
technologies, audio and video codecs, wireless baseband chips, our converged computing/communications (Snapdragon) chips,
graphics, connectivity, multimedia products, software and services. We are also investing across a broad spectrum of opportunities that
leverage our existing technical and business expertise to deploy new business models and enter into new industry segments, such as
products designed for implementation of small cells and addressing the challenge of meeting the increased demand for data; products
for the connected home and the