F2Q 2013 Results Earnings Call
April 24, 2013 4:45 p.m. ET
Warren Kneeshaw – VP, IR
Paul Jacobs - Chairman and CEO
Steven Mollenkopf - President and COO
George Davis - EVP and CFO
Derek Aberle - EVP and Group President
Donald Rosenberg - EVP, General Counsel, and Corporate Secretary
T. Michael Walkley - Canaccord Genuity
Tim Long - Bank of Montreal
Simona Jankowski - Goldman Sachs
Brian Modoff - Deutsche Bank
Kulbinder Garcha - Credit Suisse
Ehud Gelblum - Morgan Stanley
Rod Hall – JPMorgan
Stacy Rasgon - Sanford C. Bernstein
James Faucette - Pacific Crest Securities
Tal Liani - Bank of America
Mark Sue - RBC Capital Markets
Ian Ing - Lazard Capital Markets
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I would now like to turn the call over to Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.
Thank you, Ryan, and good afternoon everyone. Today's call will include prepared remarks by Dr. Paul Jacobs, Steve Mollenkopf, and George Davis. In addition, Derek Aberle and Don Rosenberg will join the question-and-answer session. An Internet presentation and audio broadcast accompany this call, and you can access them by visiting our website at www.qualcomm.com.
During the conference call, if we use non-GAAP financial measures as defined in Regulation G, you can find the related reconciliations to GAAP on our website. I'd also like to direct you to our 10-K and earnings release, which were filed and furnished, respectively, with the SEC today and are available on our website.
During this conference call, we will make forward-looking statements regarding future events or results of the company. Actual events or results could differ materially from these projected in these forward-looking statements. Please refer to our SEC filings, including our most recent Form 10-K and 10-Q, which contain important factors that could cause actual results to differ materially from the forward-looking statements.
And now it is my pleasure to introduce Qualcomm's Chairman and Chief Executive Officer, Dr. Paul Jacobs.
Thanks, Warren, and good afternoon everyone. We’re pleased to report another strong quarter, with record revenues, up 24% versus a year ago, driven by broad based demand for smartphones and strong semiconductor volumes.
In recognition of our strong financial position and the continued growth in our business, we recently announced a 40% increase in our dividend and a new $5 billion share repurchase authorization.
In QCT, we continue to drive technology and product leadership. We saw the first product announcements by our customers on our new Qualcomm Snapdragon 600 and 800 processors. We launched our new Qualcomm RF360 front-end solution, and we extended our support of the industry’s widest range of operating systems to include Mozilla’s web-based Firefox OS and innovations such as Facebook Home. Qualcomm is now ranked by revenues as the third-largest semiconductor provider in the world, up from sixth last year and ninth the year before, according to IHS.
Turning to QTL, total reported device sales came in towards the high end of our prior guidance range, reflecting continued global adoption of smartphone, particularly in emerging regions. This marks another record quarter of total reported device sales and QTL revenues.
We also continue to growth rate of our licensee base, and now have over 230 CDMA licensees and more than 50 single mode OFDMA licensees. Looking forward, we believe our long term growth drivers remain intact and are increasing our calendar year 2013 3G/4G device forecast in line with this view.
Smartphone adoption continues at a rapid pace. Gartner estimates that approximately 700 million smartphones were sold in calendar 2012, up 44% year over year. Further, they estimate that in 2017 more than 1.7 billion smartphones will be sold, representing an approximate 20% compound annual growth rate versus a 2012 base.
Smartphones have become more than just a technology product, empowering people to connect and interact with the world like never before. And we’re working to deliver continuous improvements to this user experience through our investments in industry leading innovations in smartphone technologies, including the CPU, the GPU, multimedia subsystem sensors, displays, connectivity, and of course last but not least the modem.
Emerging regions are experiencing the fastest growth for 3G as 3G networks mature and the breadth of affordable smartphones expands. Wireless Intelligence reports that at the end of the first calendar quarter of 2013, 3G connections including CDMA 1X, in emerging regions, increased 34% year over year to approximately 1.1 billion.
According to analysts, 3G connections are now more than three times the number of fixed internet connections in emerging regions, making mobile the leading and in some cases the only platform for computing and internet access. Let’s take China as an example. Wireless Intelligence reports that there are now more than 1.1 billion wireless connections, of which only approximately one-third are 3G, including 1X. There is a large remaining opportunity as consumers migrate from 2G to 3G and 3G/4G multimode.
SINO MR reports that more than six times the number of sub-1000 RMB smartphone models were launched in 2012 versus 2011. By the way, RMB1000 is approximately $160. All three carriers in China reported increased data traffic and revenue, with China Telecom reporting a 47% year over year increase in data revenue for 2012.
And beyond the phone, it’s important to remember that we’re pursing multiple incremental growth opportunities including mobile computing and what we refer to as the internet of everything.