Qualcomm Incorporated (Nasdaq: QCOM) today updated its financial guidance for the third fiscal quarter ending June 27, 2004 and the fiscal year ending September 26, 2004.
The following statements are forward-looking and actual results may differ materially. Please see description of certain risk factors in this release and Qualcomm's reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks.
Third Quarter Fiscal 2004
Based on the current business outlook, we now anticipate third fiscal quarter revenues excluding the Qualcomm Strategic Initiatives (QSI) segment to increase approximately 44-46 percent year-over-year compared to our prior guidance of 41-44 percent. We now anticipate third fiscal quarter 2004 earnings per share excluding the QSI segment to be $0.51-$0.53, an increase of 55-61 percent year-over-year, compared to our prior guidance of $0.48-$0.50. These estimates are based on the shipment of approximately 34-35 million Mobile Station Modem™ (MSM™) phone chips during the quarter. Our prior guidance was based on the shipment of approximately 33-35 million MSM phone chips during the quarter. The improved outlook is due to greater than expected WCDMA royalties, faster migration to 6000 series MSMs and stronger orders for CSM products.
We now expect total Qualcomm third fiscal quarter revenues to increase approximately 44-46 percent year-over-year. We expect total Qualcomm earnings per share to be approximately $0.49-$0.51, an increase of 113-122 percent year-over-year, compared to our prior guidance of $0.46-$0.48. Total earnings per share include an estimated $0.02 loss per share attributed to the QSI segment.
Based on the current business outlook, we are increasing our guidance for fiscal 2004. We now anticipate fiscal year 2004 revenues excluding the QSI segment will increase by approximately 28-30 percent year-over-year compared to our prior guidance of 26-29 percent increase year-over-year. We now anticipate fiscal 2004 earnings per share excluding the QSI segment to be in the range of $2.00-$2.05, an increase of 41-44 percent year-over-year, compared to our prior estimate of $1.93-$1.98. We expect to ship approximately 32-36 million MSM phone chips in the fourth fiscal quarter ended September 26, 2004. We estimate that average selling prices of CDMA phones for fiscal 2004, upon which royalties are calculated, to increase to approximately $195, compared to our prior estimate of $194. We reiterate our estimate for the CDMA phone market to be approximately 152-160 million units in calendar 2004.
Based on the current business outlook, we anticipate that total Qualcomm revenues will grow by approximately 28-30 percent year-over-year and total Qualcomm earnings per share to be in the range of $1.93-$1.98 for fiscal 2004, an increase of 91-96 percent year-over-year, compared to our prior guidance of $1.86-$1.91. Total earnings per share include an estimated $0.07 loss per share attributed to the QSI segment for fiscal 2004.
Due to their nature, certain income and expense items such as investment gains and losses, income related to the use of our FCC Auction Discount Voucher and asset impairments cannot be accurately forecast. Accordingly, the Company excludes such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.
We estimate the calendar 2005 CDMA phone market to be in the range of 195-215 million units, compared to our calendar 2004 estimate of 152-160 million units, a year-over-year growth of 31% based upon the midpoint of our estimates. Using the midpoint of 205 million, we expect approximately 160 million CDMA2000® and 45 million WCDMA unit shipments in calendar 2005, 15 percent and 165 percent growth respectively over our midpoint estimates for 2004.
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. Headquartered in San Diego, Calif., Qualcomm is included in the S&P 500 Index and is a 2003 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Note Regarding Use of Non-GAAP Financial Measures
The Company presents financial information excluding the Qualcomm Strategic Initiatives (QSI) segment to facilitate evaluation by management, investors and analysts of its ongoing core operating businesses, including Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL) and Qualcomm Wireless & Internet (QWI). QSI results relate to strategic investments for which the Company has exit strategies of varying durations. Management believes that the information excluding QSI presents a more representative measure of the operating performance of the Company because it excludes the effect of fluctuations in the value of investments that are unrelated to the Company's operational performance. The financial information excluding QSI should be considered in addition, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Reconciliations between total Qualcomm results and results excluding QSI are presented on the Company's Web site at www.qualcomm.com.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release 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 associated with: the rate of development, deployment and commercial acceptance of CDMA based networks and CDMA based technology, including CDMA2000 1X, CDMA2000 1xEV-DO and WCDMA, both domestically and internationally; our dependence on major customers and licensees, fluctuations in the demand for CDMA based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; developments in current and future litigation as well as other risks detailed from time-to-time in the Company's SEC reports.