NEW YORK -- July 25, 2000 -- Qualcomm Incorporated (Nasdaq: QCOM), pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology, today announced that it intends to spin off its integrated circuits and system software business (Qualcomm CDMA Technologies). The spin-off company, referred to as Qualcomm Spinco ("Spinco"), will be named at a later date. Spinco will focus on developing and delivering innovative wireless communications integrated circuits and system software solutions for the world's leading handset and infrastructure manufacturers. In addition to further developing its existing businesses, Qualcomm will focus on developing and supporting the growth of CDMA technology and driving the convergence of wireless data applications and Internet access.
As second-generation wireless networks evolve into third-generation systems, Qualcomm believes that the growth of the wireless industry will require multi-mode, multi-network integrated circuits that will enable roaming. To permit Spinco to gain access to technologies necessary to supply such integrated circuits and system software solutions, Qualcomm will assign a portion of its patents to Spinco, without compromising its existing licensing and royalty business. Spinco intends to use its patents to gain access to GSM and other technologies by negotiating cross-licenses. Qualcomm will have little or no need for cross-licenses following the spin-off of Spinco since it earlier exited its wireless infrastructure and phone businesses. After the spin-off, Qualcomm will have more than 1,000 patents and patent applications in the United States that are either essential or useful for existing and all proposed CDMA standards (including cdma2000 and WCDMA). Qualcomm will continue to file and obtain patent protection throughout the world and will broadly grant royalty-bearing licenses.
"The wireless industry is on the verge of its next major growth phase based on wireless Internet access," said Dr. Irwin M. Jacobs, chairman and chief executive officer of Qualcomm. "CDMA has been recognized as the preferred technology for third-generation wireless communications due to its unique ability to efficiently support high-quality voice and high-speed data. Both Qualcomm and Spinco are well positioned to further innovate and support the global expansion of wireless communications."
The Office of the Chairman executive team for Spinco will include Dr. Irwin M. Jacobs, chairman; Richard Sulpizio, chief executive officer; and Don Schrock, president and chief operating officer. Spinco will include Qualcomm's integrated circuits and system software business (Qualcomm CDMA Technologies), 1xEV (HDR) product development, position location product development (SnapTrack), and research and development centers in Boulder, Colo., the United Kingdom and Israel. According to Dataquest's most recent analysis, Qualcomm's integrated circuits and system software business is the world's largest fabless semiconductor company.
The Office of the Chairman executive team for Qualcomm will include Dr. Irwin M. Jacobs, chairman and chief executive officer, Dr. Paul Jacobs, president; Tony Thornley, chief operating officer and chief financial officer; and Steve Altman, executive vice president. As chairman of the Board of Directors of both companies, Dr. Irwin M. Jacobs will provide strategic and corporate governance.
Qualcomm intends to actively drive the rapid deployment of CDMA-based systems and technologies and the growing demand for high-speed, high-capacity, wireless data and Internet access. Additionally, Qualcomm will continue to develop its existing businesses, including Qualcomm Technology Licensing (CDMA, SnapTrack and other patents), Qualcomm Wireless Systems (OmniTRACS and Globalstar), and Qualcomm Digital Media (Eudora, Government Systems and Digital Cinema).
As contemplated, Qualcomm's integrated circuits and system software solutions business would be transferred to the new company and shares of the new company would be distributed to Qualcomm stockholders in the form of a tax-free dividend. Qualcomm expects the spin-off to be completed by August 2001. The separation of the integrated circuits and system software solutions business is subject to final approval by Qualcomm's board of directors, a favorable ruling from the IRS regarding the tax-free nature of the transaction and favorable market conditions.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's business areas include integrated CDMA chipsets and system software; technology licensing; Eudora® email software for Windows® and Macintosh® computing platforms; satellite-based systems including portions of the Globalstar™ system and wireless fleet management systems, OmniTRACS® and OmniExpress™. Qualcomm owns patents which are essential to all of the CDMA wireless telecommunications standards that have been adopted or proposed for adoption by standards-setting bodies worldwide. Qualcomm has licensed its essential CDMA patent portfolio to more than 80 telecommunications equipment manufacturers worldwide. Headquartered in San Diego, Calif., Qualcomm is included in theS&P500 Index and is a 2000 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties relating to the proposed separation and spin-off of Qualcomm's integrated circuits and system software solutions business, including the impact of the proposed separation and spin-off on Qualcomm's and the new company's results of operations, the financial accounting consequences of the proposed transaction, the impact of the spin-off on Qualcomm's stock price and its relationships with customers and employees, the tax consequences of the transaction to Qualcomm and its stockholders, changes in business climate or market conditions or other factors which could make the proposed spin-off unadvisable. This release also contains forward-looking statements subject to the risk that the rate of growth of the CDMA subscriber population will decline, risks associated with strategic investments and business relationships, developments in current or future litigation and the timing and receipt of license fees and royalties, as well as other risks including those detailed from time to time in Qualcomm's SEC reports, including its report on Form 10-K for the year ended September 26, 1999, and most recent Form 10-Q.
Qualcomm, OmniTRACS and Eudora are registered trademarks and OmniExpress is a trademark of Qualcomm Incorporated. Globalstar is a trademark of Loral Qualcomm Satellite Services, Incorporated. Windows is a registered trademark of Microsoft Corp. Macintosh is a registered trademark of Apple Computer Inc. All other trademarks are the property of their respective owners.
July 25, 2000July 25, 2000