Qualcomm Incorporated

QUALCOMM Announces Record Third Quarter Fiscal 2007 Results

    San Diego (ots/PRNewswire) -

                            Revenues US$2.33 Billion, Diluted EPS US$0.47
                    Pro Forma Revenues US$2.33 Billion, Diluted EPS US$0.55
                            Financial Guidance Increased for Fiscal 2007

    QUALCOMM Incorporated (Nasdaq: QCOM) today announced record results for  the third quarter of fiscal 2007 ended July 1, 2007.

    Total QUALCOMM (GAAP) Third Quarter Results

    Total QUALCOMM results are reported in accordance with generally accepted accounting principles (GAAP).

@@start.t1@@      --  Revenues:  US$2.33 billion, up 19 percent year-over-year and 5
            percent sequentially.
      --  Net income:  US$798 million, up 24 percent year-over-year and 10
            percent sequentially.
      --  Diluted earnings per share:  US$0.47, up 27 percent year-over-year
            and 9 percent sequentially.
      --  Effective tax rate:  18 percent for the quarter.  Fiscal 2007
            estimated tax rate of approximately 19 percent.
      --  Estimated share-based compensation:  US$76 million, net of tax, down
            8 percent year-over-year and 10 percent sequentially.
      --  Operating cash flow:  US$988 million, up 21 percent year-over-year;
            42 percent of revenues.
      --  Return of capital to stockholders:  US$363 million in the third
            quarter, including US$234 million of cash dividends, or US$0.14 per
            share, and US$129 million to repurchase 3.1 million shares of our
            common stock.@@end@@

    QUALCOMM Pro Forma Third Quarter Results

    Pro forma results exclude the QUALCOMM Strategic Initiatives (QSI) segment, certain estimated share-based compensation, certain tax adjustments related to prior years and acquired in-process research and development (R&D) expense.

@@start.t2@@      --  Revenues:  US$2.33 billion, up 19 percent year-over-year and 5
            percent sequentially.
      --  Net income:  US$934 million, up 29 percent year-over-year and 11
            percent sequentially.
      --  Diluted earnings per share:  US$0.55, up 31 percent year-over-year
            and 10 percent sequentially; excludes US$0.04 loss per share
            attributable to the QSI segment and US$0.04 loss per share
            attributable to certain estimated share-based compensation.
      --  Effective tax rate:  21 percent for the quarter.  Fiscal 2007
            estimated tax rate of approximately 23 percent.
      --  Free cash flow:  US$977 million, up 23 percent year-over-year; 42
            percent of revenues.  (Defined as net cash from operating activities
            less capital expenditures).@@end@@

    Detailed reconciliations between total QUALCOMM (GAAP) results and QUALCOMM pro forma results, and cash flow are included at the end of this news release. Prior period reconciliations are presented on our Investor Relations web page at www.qualcomm.com.

    "We had another tremendous quarter, providing market validation for the innovative products and solutions delivered by our employees and partners worldwide," said Dr. Paul E. Jacobs, chief executive officer of QUALCOMM. "The fundamental drivers of our business remain very strong. Our record revenue and earnings this quarter reflect continued worldwide demand for innovative third-generation devices and services. We shipped a record 65 million CDMA-based MSM(TM) chipsets in the third quarter representing strong year-over-year growth in both 1xEV-DO and WCDMA. Strong March quarter handset shipments demonstrate the continued global adoption of CDMA-based technologies with over 30% growth from the year ago quarter."

    "In addition to continued excellent business and financial performance, we also see traction for our initiatives to expand the wireless market. Multiple WCDMA operators have adopted the BREW platform, our MediaFLO(TM) system continues to grow as we expand our service footprint in the United States and conduct new trials around the world, and our Snapdragon(TM) processor is building momentum in the computing and consumer electronics markets."

    "While we continue to execute well and the future of CDMA-based technology is very bright, we are also expending a great amount of time and resources defending our business model. In the most recent quarter, we have made progress in some of these battles, while losing ground in others. We were disappointed with the rulings on behalf of Broadcom, both in the California litigation and in front of the ITC. We continue to believe that the rulings were wrong and are pursuing all avenues to reverse and to mitigate the effect of those rulings, including working with our partners who may obtain a license from Broadcom. While we are increasing our guidance for the year, ITC and litigation outcomes are uncertain and could have a material impact on our business and results of operations."

    Cash and Marketable Securities

    QUALCOMM's cash, cash equivalents and marketable securities totaled approximately US$12.3 billion at the end of the third quarter of fiscal 2007, compared to US$11.3 billion at the end of the second quarter of fiscal 2007 and US$9.5 billion a year ago. As of July 1, 2007, US$2.6 billion remains authorized for repurchases under our stock repurchase program, net of put options outstanding. On July 13, 2007, we announced a cash dividend of US$0.14 per share payable on September 28, 2007 to stockholders of record at the close of business on August 31, 2007.

    Estimated Share-Based Compensation

    Total QUALCOMM (GAAP) net income for the third quarter of fiscal 2007 includes estimated share-based compensation, net of tax, of US$76 million, or US$0.04 per diluted share, compared to US$83 million, or US$0.05 per diluted share in the prior year quarter.

@@start.t3@@      Research and Development
      (All currency expressed in US$ unless otherwise noted)
                                                                        Estimated                          Total
                                                  QUALCOMM      Share-Based                      QUALCOMM
        ($ in millions)                  Pro Forma    Compensation      QSI          (GAAP)
      Third quarter fiscal 2007        $385              $50                $19              $454
      As a % of revenue                        17%                                                        20%
      Third quarter fiscal 2006        $322              $56                $17              $395
      As a % of revenue                        17%                                                        20%
      Year-over-year change ($)          20%            (11%)              12%                15%@@end@@

    Pro forma R&D expenses increased 20 percent year-over-year, primarily due to additional engineering resources for the development of integrated circuit products and other initiatives to support low-cost phones, multimedia applications, high-speed wireless Internet access and multi-mode, multi-band, multi-network products and technologies. QSI R&D expenses are related to MediaFLO USA.

@@start.t4@@      Selling, General and Administrative
                                                                          Estimated                        Total
                                                      QUALCOMM      Share-Based                  QUALCOMM
      ($ in millions)                        Pro Forma    Compensation    QSI         (GAAP)
      Third quarter fiscal 2007          $307              $54              $40          $401
      As a % of revenue                          13%                                                  17%
      Third quarter fiscal 2006          $214              $60              $19          $293
      As a % of revenue                          11%                                                  15%
      Year-over-year change ($)              43%            (10%)          111%            37%@@end@@

    Pro forma selling, general and administrative (SG&A) expenses increased 43 percent year-over-year, largely attributable to increases in costs related to litigation and other legal matters and employee related expenses. The year-over-year increase in QSI SG&A expenses is primarily related to MediaFLO USA cooperative marketing expenses.

    Effective Income Tax Rate

    Our fiscal 2007 effective income tax rate is estimated to be 19 percent for total QUALCOMM (GAAP) compared to our prior estimate of 21 percent. Our fiscal 2007 QUALCOMM pro forma effective income tax rate is estimated to be 23 percent, compared to our previous estimate of 24 percent. The third quarter QUALCOMM (GAAP) and pro forma effective tax rates of 18 percent and 21 percent, respectively, are lower than the expected annual effective tax rates primarily due to our estimate of additional foreign earnings taxed at less than the United States federal tax rate.

    QUALCOMM Strategic Initiatives

    The QSI segment includes our strategic investments, including our MediaFLO USA subsidiary, and related income and expenses. Total QUALCOMM (GAAP) results for the third quarter of fiscal 2007 include US$0.04 loss per share for the QSI segment. The third quarter of fiscal 2007 QSI results include US$95 million in operating expenses, primarily related to MediaFLO  USA.

    Business Outlook

    The following statements are forward-looking and actual results may differ materially. Please see "Note Regarding Forward-Looking Statements" at the end of this news release for a description of certain risk factors and QUALCOMM's annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks. Due to their nature, certain income and expense items, such as realized investment gains or losses in QSI, gains and losses on certain derivative instruments, asset impairments or the impact of the resolution of income tax audits, cannot be accurately forecast. Accordingly, the Company excludes forecasts of 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. In addition, our outlook provides for legal costs which are reasonably consistent with our experience over the past year but does not include any provision for the consequences of injunctions or significant damages or costs related to litigation matters, including support we may agree to provide to our customers. Although Verizon announced it has entered into a license agreement with Broadcom eliminating risk of not being able to import handsets using our chips for use in Verizon's network, a comprehensive settlement between us and Broadcom is unlikely given Broadcom's insistence on terms which could have a material impact on our licensing business. As a result, over the next few months, we will be defending ourselves from Broadcom's attempts to obtain an injunction precluding the sale of certain of our chips sold in handsets for use in the U.S. other than in Verizon's network.

    The following table summarizes total QUALCOMM (GAAP) and QUALCOMM pro forma guidance for the fourth fiscal quarter and fiscal 2007 based on the current business outlook. The pro forma business outlook provided below is presented consistent with the presentation of pro forma results provided elsewhere herein.

    We are engaged in multiple disputes with Nokia Corp., including litigation over Nokia's obligation to pay royalties for the use of certain of our patents. As a result, under generally accepted accounting principles, we do not expect to be able to record royalty revenue attributable to Nokia's sales starting in the fourth quarter of fiscal 2007 until an arbitrator (or court) awards damages or the disputes are otherwise resolved by agreement with Nokia. Our estimate of royalties which we believe will be owed by Nokia in the fourth quarter of fiscal year 2007 for June quarter shipments is approximately US$0.05 diluted earnings per share, which we have excluded from our current fourth fiscal quarter and fiscal 2007 guidance, compared to our prior estimate of approximately US$0.04 to US$0.05 diluted earnings per  share.

    The following estimates are approximations and are based on the current business outlook:

@@start.t5@@                                            Business Outlook Summary
      FOURTH FISCAL QUARTER
                                                                                              Current Guidance
                                                                         Q4'06                      Q4'07
                                                                        Results              Estimates (1)
         QUALCOMM Pro Forma
         Revenues                                                  $2.00B         $2.15B - $2.25B
         Year-over-year change                                              increase 8% - 13%
         Diluted earnings per share (EPS)              $0.42            $0.48 - $0.50
         Year-over-year change                                            increase 14% - 19%
         Total QUALCOMM (GAAP)
         Revenues                                                  $2.00B         $2.15B - $2.25B
         Year-over-year change                                              increase 8% - 13%
         Diluted earnings per share (EPS)              $0.36            $0.41 - $0.43
         Year-over-year change                                            increase 14% - 19%
         Diluted EPS attributable to QSI                $0.00                        ($0.02)
         Diluted EPS attributable to
          estimated share-based
          compensation                                          ($0.05)                      ($0.05)
         Metrics
         MSM Shipments                                    approx. 56M      approx. 65M - 68M
         CDMA/WCDMA handset units
          shipped(2)                                        approx. 70M(i) approx. 90M - 94M(i)
         CDMA/WCDMA handset unit wholesale
          average selling price (2)              approx. $223(i)          approx.$222(i)
         (i) Shipments in June quarter,
                reported in Sept. quarter
      FISCAL YEAR
                                                                      Prior                         Current
                                                                    Guidance                    Guidance
                                              FY 2006          FY 2007                        FY 2007
                                              Results         Estimates(1)              Estimates(1)
         QUALCOMM Pro Forma
         Revenues                      $7.53B            $8.4B - $8.7B         $8.72B - $8.82B
         Year-over-year change                increase 12% - 16%    increase 16% - 17%
         Diluted earnings per
          share (EPS)                 $1.64            $1.84 - $1.88            $1.95 - $1.97
         Year-over-year change                increase 12% - 15%    increase 19% - 20%
         Total QUALCOMM (GAAP)
         Revenues                      $7.53B            $8.4B - $8.7B         $8.72B - $8.82B
         Year-over-year change                increase 12% - 16%    increase 16% - 17%
         Diluted earnings per
          share (EPS)                 $1.44            $1.57 - $1.61            $1.69 - $1.71
         Year-over-year change                 increase 9% - 12%    increase 17% - 19%
         Diluted EPS
          attributable to
          in-process R&D          ($0.01)                      ($0.01)                      ($0.01)
         Diluted EPS
          attributable
          to QSI                        ($0.02)                      ($0.09)                      ($0.08)
         Diluted EPS
          attributable to
          estimated
          share-based
          compensation              ($0.19)                      ($0.20)                      ($0.19)
         Diluted EPS
          attributable to
          tax items related
          to prior years            $0.02                         $0.02                         $0.02
         Metrics
         Fiscal year(i)
          CDMA/WCDMA handset
          unit wholesale
          average
          selling
          price (2)         approx. $215              approx. $208              approx. $216
        (i) Shipments in
            Sept. to June
            quarters,
            reported in
            Dec. to Sept.
            quarters
      CALENDAR YEAR Handset Estimates(2)
                                                                Prior Guidance         Current Guidance
      CDMA/WCDMA handset                              Calendar 2007            Calendar 2007
        unit shipments          Calendar 2006      Estimates                  Estimates
      March quarter              approx. 66M    approx. 81M - 85M              approx. 88M
      June quarter                approx. 70M            not provided    approx. 90M - 94M
      September quarter        approx. 76M            not provided            not provided
      December quarter         approx. 91M            not provided            not provided
      Calendar year range
      (approx.)                                301M              373M - 393M              378M - 398M
                                              Midpoint                  Midpoint                  Midpoint
      CDMA/WCDMA units        approx. 301M            approx. 383M            approx. 388M
      CDMA units                 approx. 200M            approx. 208M            approx. 208M
      WCDMA units                approx. 101M            approx. 175M            approx. 180M
      (1)  These estimates do not reflect the potential opportunity of Nokia
              paying royalties in the fourth quarter of fiscal 2007 for June
              quarter shipments. Our current estimate of such opportunity is
              approximately $0.05 diluted earnings per share, compared to our
              prior estimate of approximately $0.04 to $0.05 diluted earnings per
              share.
      (2)  CDMA/WCDMA handset unit shipments and average selling prices are
              provided for the total market.
      Sums may not equal totals due to rounding.@@end@@

    Results of Business Segments

    The following tables, which present segment information, have been adjusted to reflect the 2007 segment presentation (Note 1) (in millions,  except per share data):

@@start.t6@@      Third Quarter - Fiscal Year 2007
                                                                                                        Reconciling
      Segments                                      QCT          QTL         QWI              Items(2)
      Revenues                                  $1,367        $766        $196                $(4)
      Change from prior year                  21%         20%         10%              N/M
      Change from prior quarter                9%          1%         (1%)            N/M
      EBT                                              $439        $668         $18                $52
      Change from prior year                  27%         16%          0%              N/M
      Change from prior quarter              19%          5%        (10%)            N/M
      Net income (loss)
      Change from prior year
      Change from prior quarter
      Diluted EPS
      Change from prior year
      Change from prior quarter
      Diluted shares used
                                                              Estimated                                Total
                                    QUALCOMM          Share-Based                            QUALCOMM
      Segments                 Pro Forma        Compensation(3)      QSI(4)         (GAAP)
      Revenues                  $2,325                  $--                  $--            $2,325
      Change from
        prior year                    19%                                                                 19%
      Change from
        prior quarter                 5%                                                                  5%
      EBT                          $1,177                $(114)                $(91)              $972
      Change from
        prior year                    21%                 (10%)                250%                 18%
      Change from
        prior quarter                 6%                 (10%)                117%                  5%
      Net income (loss)        $934                 $(75)                $(61)              $798
      Change from
        prior year                    29%                 (10%)                N/M                  24%
      Change from
        prior quarter                11%                 (10%)                205%                 10%
      Diluted EPS                $0.55              $(0.04)            $(0.04)            $0.47
      Change from
        prior year                    31%                 (20%)                N/M                  27%
      Change from
        prior quarter                10%                 (20%)                300%                  9%
      Diluted
        shares used              1,704                1,704                1,704              1,704
      Second Quarter - Fiscal Year 2007
                                                                                                 Reconciling
      Segments                              QCT            QTL          QWI            Items (2)
      Revenues                          $1,259         $759         $198                 $5
      EBT                                      $368         $636          $20                $82
      Net income (loss)
      Diluted EPS
      Diluted shares used
                                                  Estimated
                                QUALCOMM    Share-Based      In-process                      Total
      Segments          Pro Forma  Compensation(3)      R&D          QSI (4)    (GAAP)
      Revenues              $2,221            $--                 $--            $--         $2,221
      EBT                      $1,106         $(126)              $(10)         $(42)          $928
      Net income
        (loss)                  $838          $(83)                $(9)         $(20)          $726
      Diluted EPS          $0.50        $(0.05)          $(0.01)      $(0.01)         $0.43
      Diluted shares
        used                    1,693         1,693              1,693         1,693          1,693
      Third Quarter - Fiscal Year 2006
                                                                                                      Reconciling
      Segments                        QCT(1)(i)      QTL(1)(i)    QWI (1)(i) Items(1)(2)(i)
      Revenues                        $1,133              $640              $178                $--
      EBT                                    346                576                 18                 36
      Net income (loss)
      Diluted EPS
      Diluted shares used
                                                                Estimated                              Total
                                         QUALCOMM        Share-Based                          QUALCOMM
      Segments                      Pro Forma    Compensation(3)    QSI(4)         (GAAP)
      Revenues                         $1,951                 $--                $--          $1,951
      EBT                                      976                (126)              (26)              824
      Net income (loss)                726                 (83)                --                643
      Diluted EPS                      $0.42            $(0.05)              $--            $0.37
      Diluted shares used         1,728              1,728            1,728            1,728
      Fourth Quarter - Fiscal Year 2006
                                                                                                    Reconciling
      Segments                  QCT(1)(i)      QTL(1)(i)    QWI(1)(i)      Items(1)(2)(i)
      Revenues                  $1,147            $661              $196                  $(5)
      EBT                                323              591                 26                    21
      Net income (loss)
      Diluted EPS
      Diluted shares used
                                              Estimated                                                    Total
                         QUALCOMM      Share-Based         Tax    In-Process            QUALCOMM
      Segments      Pro Forma  Compensation(3)  Items        R&D         QSI(4)  (GAAP)
      Revenues         $1,999            $--                $--         $--          $--      $1,999
      EBT                      961          (127)                --          (1)         (23)         810
      Net income
        (loss)                705            (76)              (16)         (1)            2          614
      Diluted
        EPS                 $0.42        $(0.05)         $(0.01)        $--          $--        $0.36
      Diluted
        shares
        used                1,693         1,693            1,693      1,693        1,693        1,693
      Twelve Months - Fiscal Year 2006
                                                                                                    Reconciling
      Segments                        QCT(1)(i)    QTL(1)(i)    QWI (1)(i)  Items(1)(2)(i)
      Revenues                        $4,332          $2,467            $731              $(4)
      EBT                                 1,298            2,233                78              197
      Net income (loss)
      Diluted EPS
      Diluted shares used
                                              Estimated                                                    Total
                         QUALCOMM      Share-Based         Tax    In-Process            QUALCOMM
      Segments      Pro Forma  Compensation(3)  Items        R&D         QSI(4)  (GAAP)
      Revenues        $7,526            $--                 $--         $--          $--      $7,526
      EBT                 3,806          (495)                 --         (22)        (133)      3,156
      Net income
      (loss)            2,804          (320)                 40         (22)         (32)      2,470
      Diluted
        EPS                $1.64        $(0.19)            $0.02    $(0.01)    $(0.02)      $1.44
      Diluted
        shares
        used              1,711         1,711              1,711      1,711        1,711        1,711
      Nine Months - Fiscal Year 2007
                                                                                                        Reconciling
      Segments                              QCT                QTL                QWI          Items(2)
      Revenues                         $3,856          $2,125              $583                 $1
      Change from prior year         21%                18%                 9%              N/M
      EBT                                 $1,123          $1,803                $58              $250
      Change from prior year         15%                10%                14%              N/M
      Net income (loss)
      Change from prior year
      Diluted EPS
      Change from prior year
      Diluted shares used
                                                Estimated                                                  Total
                          QUALCOMM      Share-Based        Tax      In-Process          QUALCOMM
      Segments        Pro Forma  Compensation(3) Items(5)    R&D        QSI(4)  (GAAP)
      Revenues          $6,565            $--              $--          $--         $--    $6,565
      Change from
        prior year            19%                                                                            19%
      EBT                  $3,234         $(370)            $--         $(10)    $(176)  $2,678
      Change from
        prior year            14%              1%                            (52%)        60%         14%
      Net income
        (loss)              2,494          (244)              33            (9)      (103)  $2,171
      Change from
        prior year            19%              0%            (41%)        (57%)      203%         17%
      Diluted EPS        $1.47        $(0.14)         $0.02      $(0.01)  $(0.06)    $1.28
      Change from
        prior year            20%              0%            (33%)          0%        200%         19%
      Diluted
        shares
        used                 1,694         1,694          1,694        1,694      1,694      1,694
      Nine Months - Fiscal Year 2006
                                                                                                      Reconciling
      Segments                        QCT(1)(i)    QTL(1)(i)        QWI(1)(i) Items(1)(2)(i)
      Revenues                         $3,184          $1,806              $535                 $2
      EBT                                      975            1,642                 51                177
      Net income
      Diluted EPS
      Diluted shares used
                                              Estimated                                                    Total
                         QUALCOMM      Share-Based         Tax    In-Process            QUALCOMM
      Segments      Pro Forma  Compensation(3)  Items        R&D         QSI(4)  (GAAP)
      Revenues         $5,527            $--                $--         $--          $--      $5,527
      EBT                  2,845          (368)                --         (21)        (110)      2,346
      Net income        2,098          (243)                56         (21)         (34)      1,856
      Diluted EPS      $1.22        $(0.14)          $0.03    $(0.01)    $(0.02)      $1.08
      Diluted
        shares
        used                1,717         1,717            1,717      1,717        1,717        1,717@@end@@

@@start.t7@@      (1)  During the first quarter of fiscal 2007, the Company reassessed the
              intersegment royalty charged to QCT by QTL and determined that the
              royalty should be eliminated starting in fiscal 2007 for management
              reporting purposes.  As a result, QCT did not record a royalty to
              QTL in the first nine months of fiscal 2007.  The Company also
              reorganized the QUALCOMM Wireless Systems (QWS) division into the
              QWBS division within the QWI segment.  Revenues and operating
              results relating to QWS were included in reconciling items through
              the end of fiscal 2006.  Prior period segment information has been
              adjusted to conform to the new segment presentation.
      (2)  Reconciling items related to revenues consist primarily of other
              nonreportable segment revenues less intersegment eliminations.
              Reconciling items related to earnings before taxes consist primarily
              of certain investment income, research and development expenses and
              marketing expenses that are not allocated to the segments for
              management reporting purposes, nonreportable segment results and the
              elimination of intersegment profit.
      (3)  Certain share-based compensation is included in operating expenses
              as part of employee-related costs but is not allocated to the
              Company's segments as such costs are not considered relevant by
              management in evaluating segment performance.
      (4)  At fiscal year-end, the sum of the quarterly tax provisions for each
              column, including QSI, equals the annual tax provisions for each
              column computed in accordance with GAAP.  In interim quarters, the
              tax provision for the QSI operating segment is computed by
              subtracting the tax provision for QUALCOMM pro forma, the tax
              adjustment column and the tax provisions related to estimated
              share-based compensation and in-process R&D from the tax provision
              for total QUALCOMM (GAAP).
      (5)  During the first quarter of fiscal 2007, the federal R&D tax credit
              that expired on December 31, 2005 was extended by Congress for a
              period of two years beyond the prior expiration date.  The Company
              recorded a tax benefit of $33 million, or $0.02 diluted earnings per
              share, related to fiscal 2006 in the first quarter of fiscal 2007
              due to this retroactive extension.  The effective tax rate for the
              first quarter of fiscal 2007 for total QUALCOMM (GAAP) was 17%
              primarily as a result of this benefit.  The first quarter fiscal
              2007 QUALCOMM pro forma results excluded this tax benefit
              attributable to 2006.
      N/M - Not Meaningful
      Sums may not equal totals due to rounding.
      (i)As adjusted to conform to 2007 segment presentation@@end@@

    Conference Call

    QUALCOMM's third quarter fiscal 2007 earnings conference call will be broadcast live on July 25, 2007 beginning at 1:45 p.m. Pacific Daylight Time (PDT) on the Company's web site at: www.qualcomm.com. This conference call may contain forward-looking financial information. The conference call will include a discussion of "non-GAAP financial measures" as that term is defined in Regulation G. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company's financial results prepared in accordance with GAAP, as well as the other material financial and statistical information to be discussed in the conference call, will be posted on the Company's Investor Relations web site at www.qualcomm.com immediately prior to commencement of the call. A taped audio replay will be available via telephone on July 25, 2007 beginning at approximately 5:30 p.m. (PDT) through August 25, 2007 at 9:00 p.m. (PDT). To listen to the replay, U.S. callers may dial +1-800-642-1687 and international callers may dial +1-706-645-9291. U.S. and international callers should use reservation number 6342604. An audio replay of the conference call will be available on the Company's web site at www.qualcomm.com for two weeks following the live call.

    Editor's Note: To view the web slides that accompany this earnings release and conference call, please go to the QUALCOMM Investor Relations website at http://investor.qualcomm.com/results.cfm.

    QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., QUALCOMM is included in the S&P 500 Index and is a 2007 FORTUNE 500(R) company traded on The Nasdaq Stock Market(R) under the ticker symbol QCOM.

    Note Regarding Use of Non-GAAP Financial Measures

    The Company presents pro forma financial information that is used by management (i) to evaluate, assess and benchmark the Company's operating results on a consistent and comparable basis, (ii) to measure the performance and efficiency of the Company's ongoing core operating businesses, including the QUALCOMM CDMA Technologies, QUALCOMM Technology Licensing and QUALCOMM Wireless & Internet segments, and (iii) to compare the performance and efficiency of these segments against each other and against competitors outside the Company. Pro forma measurements of the following financial data are used by the Company's management: revenues, R&D expenses, SG&A expenses, total operating expenses, operating income, net investment income, income before income taxes, effective tax rate, net income, diluted earnings per share, operating cash flow and free cash flow. Management is able to assess what it believes is a more meaningful and comparable set of financial performance measures for the Company and its business segments by using pro forma information. As a result, management compensation decisions and the review of executive compensation by the Compensation Committee of the Board of Directors focus primarily on pro forma financial measures applicable to the Company and its business segments.

    Pro forma information used by management excludes the QUALCOMM Strategic Initiatives (QSI) segment, certain estimated share-based compensation, certain tax adjustments related to prior years and acquired in-process R&D. The QSI segment is excluded because the Company expects to exit its strategic investments at various times and the effects of fluctuations in the value of such investments are viewed by management as unrelated to the Company's operational performance. Estimated share-based compensation, other than amounts related to share-based awards granted under the executive bonus program, is excluded because management views the valuation of options and other share-based compensation as theoretical and unrelated to the Company's operational performance as the share-based compensation is affected by factors that are subject to change on each grant date, including the Company's stock price, stock market volatility, expected option life, risk-free interest rates and expected dividend payouts in future years. Moreover, it is generally not an expense that requires or will require cash payment by the Company. Certain tax adjustments related to prior years are excluded in order to provide a clearer understanding of the Company's ongoing tax rate and after tax earnings. Acquired in-process R&D is excluded because such expense is viewed by management as unrelated to the operating activities of the Company's ongoing core businesses.

    The Company presents free cash flow, defined as net cash provided by operating activities less capital expenditures, to facilitate an understanding of the amount of cash flow generated that is available to grow its business and to create long-term shareholder value. The Company believes that this presentation is useful in evaluating its operating performance and financial strength. In addition, management uses this measure to evaluate the Company's performance, to value the Company and to compare its operating performance with other companies in the industry.

    The non-GAAP pro forma financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, pro forma is not a term defined by GAAP, and, as a result, the Company's measure of pro forma results might be different than similarly titled measures used by other companies. Reconciliations between total QUALCOMM (GAAP) results and QUALCOMM pro forma results and total QUALCOMM (GAAP) cash flow and QUALCOMM pro forma cash flow are presented herein.

    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, 1xEV-DO, WCDMA and HSDPA both domestically and internationally; our dependence on major customers and licensees; attacks on our licensing business model, including results of current and future litigation and arbitration proceedings as well as actions of governmental or quasi-governmental bodies, and the costs we incur in connection therewith; fluctuations in the demand for CDMA-based products, services or applications; outcomes of audits by taxing authorities; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; our dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; the development, deployment and commercial acceptance of the MediaFLO USA network and FLO(TM) technology; as well as the other risks detailed from time-to-time in the Company's SEC reports.

    (C) 2007 QUALCOMM Incorporated. All rights reserved. QUALCOMM is a registered trademark of QUALCOMM Incorporated. CDMA2000(R) is a registered trademark of the Telecommunications Industry Association. All other trademarks are the property of their respective owners.

      QUALCOMM Contact:
      John Gilbert
      Vice President of Investor and Industry Analyst Relations
      +1-858-658-4813 (ph) +1-858-651-9303 (fax)
      e-mail: ir@qualcomm.com

@@start.t8@@                                                      QUALCOMM Incorporated
                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                            THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
                                 PRO FORMA RESULTS TO TOTAL QUALCOMM (GAAP) RESULTS
                                          (In millions, except per share data)
                                                            (Unaudited)
                                                      Three Months Ended July 1, 2007
                                                                  Estimated                        Total
                                          QUALCOMM         Share-Based                    QUALCOMM
                                          Pro Forma    Compensation(a)        QSI      (GAAP)
      Revenues:
         Equipment and
          services                    $1,484                $--                  $--        $1,484
         Licensing and
          royalty fees                  841                 --                    --            841
                Total revenues        2,325                 --                    --         2,325
      Operating expenses:
         Cost of equipment
          and services
          revenues                         642                 10                    36            688
         Research and
          development                    385                 50                    19            454
         Selling, general and
          administrative                307                 54                    40            401
                Total operating
                 expenses                1,334                114                    95         1,543
      Operating income
        (loss)                                991              (114)                 (95)          782
      Investment income, net        186 (b)          --                      4 (c)      190
      Income (loss) before
        income taxes                  1,177              (114)                 (91)          972
      Income tax (expense)
        benefit                            (243)(d)          39                    30 (e)    (174)(d)
      Net income (loss)              $934              $(75)                $(61)         $798
      Earnings (loss) per
        common share:
          Diluted                        $0.55          $(0.04)            $(0.04)        $0.47
      Shares used in per share
        calculations:
          Diluted                        1,704            1,704                1,704         1,704
      Supplemental Financial
        Data:
      Operating Cash Flow        $1,122          $(80) (g)            $(54)         $988
      Operating Cash Flow as
        a % of Revenues                  48%                                                         42%
      Free Cash Flow (f)            $977          $(80) (g)            $(66)         $831
      Free Cash Flow as a % of
        Revenues                              42%                                                         36%
      (a)  Estimated share-based compensation presented above and excluded from
              pro forma results does not include $1 million, net of tax, related
              to share-based awards granted under the executive bonus program.
      (b)  Includes $143 million in interest and dividend income related to
              cash, cash equivalents and marketable securities, which are not part
              of the Company's strategic investment portfolio, $41 million in net
              realized gains on investments and $2 million in gains on derivative
              instruments related to decreases in the fair value of the put option
              liabilities related to our share repurchase program.
      (c)  Includes $12 million in net realized gains on investments and $2
              million in interest and dividend income, partially offset by $8
              million in other-than-temporary losses on investments, $1 million in
              interest expense and $1 million in losses on derivative instruments.
      (d)  The third quarter of fiscal 2007 tax rates are approximately 18% for
              total QUALCOMM (GAAP) and approximately 21% for QUALCOMM pro forma.
      (e)  At fiscal year-end, the sum of the quarterly tax provisions for each
              column, including QSI, will equal the annual tax provisions for each
              column computed in accordance with GAAP.  In interim quarters, the
              tax provision for the QSI operating segment is computed by
              subtracting the tax provision for QUALCOMM pro forma and the tax
              provisions related to estimated share-based compensation and
              in-process R&D from the tax provision for total QUALCOMM (GAAP).
      (f)  Free Cash Flow is calculated as net cash provided by operating
              activities less capital expenditures.  Reconciliation of these
              amounts is included in the Reconciliation of Pro Forma Free Cash
              Flows to Total QUALCOMM (GAAP) Net Cash Provided by Operating
              Activities and Other Supplemental Disclosures for the three months
              ended July 1, 2007, included herein.
      (g)  Incremental tax benefits from stock options exercised during the
              period.@@end@@

@@start.t9@@                                                         QUALCOMM Incorporated
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                          THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
                                PRO FORMA RESULTS TO TOTAL QUALCOMM (GAAP) RESULTS
                                          (In millions, except per share data)
                                                              (Unaudited)
                                                  Nine Months Ended July 1, 2007
                                                 Estimated        Tax         In-                  Total
                                QUALCOMM  Share-Based    Adjust- Process              QUALCOMM
                              Pro Forma Compensation(a) ment        R&D        QSI      (GAAP)
      Revenues:
         Equipment
          and
          services          $4,196          $--          $--         $--         $--      $4,196
         Licensing
          and royalty
          fees                  2,369            --            --          --          --        2,369
              Total
                revenues        6,565            --            --          --          --        6,565
      Operating
        expenses:
         Cost of
          equipment
          and services
          revenues            1,882            29            --          --          45        1,956
         Research and
          development        1,120          166            --          10          52        1,348
         Selling, general
          and
          administrative      890          175            --          --          90        1,155
              Total
                operating
                expenses        3,892          370            --          10         187        4,459
      Operating
        income
        (loss)                  2,673         (370)          --         (10)      (187)      2,106
      Investment
        income
        (expense), net         561(b)        --            --          --          11(c)      572
      Income (loss)
        before income
        taxes                    3,234         (370)          --         (10)      (176)      2,678
      Income tax
      (expense)
        benefit                  (740)         126            33            1      73(e)    (507)(d)
      Net income
      (loss)                  $2,494        $(244)         $33         $(9)  $(103)      $2,171
      Earnings (loss)
        per common share:
          Diluted              $1.47      $(0.14)      $0.02    $(0.01) $(0.06)        $1.28
      Shares used in
        per share
        calculations:
          Diluted            1,694         1,694        1,694      1,694    1,694         1,694
      Supplemental
        Financial
        Data:
      Operating Cash
        Flow                  $3,116         $(199)(g)    $--        $(10)  $(139)      $2,768
      Operating
        Cash Flow
        as a % of
        Revenue                    47%                                                                         42%
      Free Cash
        Flow(f)              $2,610         $(199)(g)    $--        $(10)  $(204)      $2,197
      Free Cash
        Flow as a
        % of Revenue            40%                                                                        33%
      (a)  Estimated share-based compensation presented above and excluded from
              pro forma results does not include $2 million, net of tax, related
              to share-based awards granted under the executive bonus program.
      (b)  Includes $409 million in interest and dividend income related to
              cash, cash equivalents and marketable securities, which are not part
              of the Company's strategic investment portfolio, $154 million in net
              realized gains on investments and $2 million in gains on derivative
              instruments related to decreases in the fair value of the put option
              liabilities related to our share repurchase program, partially
              offset by $2 million in other-than-temporary losses on investments
              and $2 million in interest expense.
      (c)  Includes $19 million in net realized gains on investments and $6
              million in interest and dividend income, partially offset by $9
              million in other-than-temporary losses on investments, $3 million in
              interest expense and $2 million in losses on derivative instruments.
      (d)  The tax rate of 19% for the first nine months of fiscal 2007 for
              total QUALCOMM (GAAP) is consistent with the estimated annual
              effective tax rate.
      (e)  At fiscal year-end, the sum of the quarterly tax provisions for each
              column, including QSI, will equal the annual tax provisions for each
              column computed in accordance with GAAP.  In interim quarters, the
              tax provision for the QSI operating segment is computed by
              subtracting the tax provision for QUALCOMM pro forma, the tax
              adjustment column and the tax provisions related to estimated share-
              based compensation and in-process R&D from the tax provision for
              total QUALCOMM (GAAP).
      (f)  Free Cash Flow is calculated as net cash provided by operating
              activities less capital expenditures.  Reconciliation of these
              amounts is included in the Reconciliation of Pro Forma Free Cash
              Flows to Total QUALCOMM (GAAP) Net Cash Provided by Operating
              Activities and Other Supplemental Disclosures for the nine months
              ended July 1, 2007, included herein.
      (g)  Incremental tax benefits from stock options exercised during the
              period.@@end@@

@@start.t10@@                                                      QUALCOMM Incorporated
                                  RECONCILIATION OF PRO FORMA FREE CASH FLOWS TO
                      TOTAL QUALCOMM (GAAP) NET CASH PROVIDED BY OPERATING ACTIVITIES
                                         AND OTHER SUPPLEMENTAL DISCLOSURES
                                                        (In millions)
                                                         (Unaudited)
                                                  Three Months Ended July 1, 2007
                                                              Estimated                            Total
                                          QUALCOMM    Share-Based                        QUALCOMM
                                          Pro Forma  Compensation      QSI            (GAAP)
          Net cash provided
            (used) by
              operating
              activities              $1,122         $(80)(a)         $(54)            $988
          Less:  capital
            expenditures                (145)          --                 (12)            (157)
          Free cash flow              $977         $(80)              $(66)            $831
          Other supplemental
            cash disclosures:
                Cash transfers
                 from QSI (1)            $40          $--                $(40)              $--
                Cash transfers
                 to QSI (2)                (70)          --                  70                 --
                Net cash
                 transfers                $(30)         $--                 $30                $--
                                                      Nine Months Ended July 1, 2007
                                                            Estimated                                  Total
                                        QUALCOMM      Share-Based  In-Process            QUALCOMM
                                        Pro Forma    Compensation      R&D         QSI      (GAAP)
         Net cash provided
          (used) by
          operating
          activities                $3,116      $(199)(a)         $(10)      $(139)    $2,768
         Less:  capital
          expenditures                (506)         --                  --          (65)        (571)
         Free cash flow          $2,610      $(199)              $(10)      $(204)    $2,197
         Other
          supplemental
          cash disclosures:
              Cash transfers
                from QSI(1)              $53         $--                 $--         $(53)         $--
              Cash transfers
                to QSI(2)                (264)         --                  --          264            --
              Net cash
                transfers              $(211)        $--                 $--         $211          $--
         (1) Cash from loan payments and sale of equity securities.
         (2) Funding for strategic debt and equity investments, capital
                expenditures and other QSI operating expenses.
                                                        Three Months Ended June 25, 2006
                                                                      Estimated                      Total
                                                QUALCOMM        Share-Based                  QUALCOMM
                                                Pro Forma    Compensation        QSI      (GAAP)
          Net cash provided
            (used) by
            operating activities      $954            $(103)(a)        $(35)      $816
          Less:  capital
            expenditures                  (159)                --                (23)      (182)
          Free cash flow                 $795            $(103)            $(58)      $634
                                                          Nine Months Ended June 25, 2006
                                                                 Estimated                          Total
                                            QUALCOMM      Share-Based                      QUALCOMM
                                            Pro Forma    Compensation        QSI         (GAAP)
         Net cash provided
          (used) by operating
          activities                  $2,739          $(376)(a)        $(62)        $2,301
         Less:  capital
          expenditures                  (466)              --                (90)          (556)
         Free cash flow              $2,273          $(376)          $(152)        $1,745
         (a) Incremental tax benefits from stock options exercised during the
                period.@@end@@

@@start.t11@@                                              QUALCOMM Incorporated
                                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In millions, except per share data)
                                                    (Unaudited)
                                                        ASSETS
                                                                                July 1,          September 24,
                                                                                  2007                      2006
                Current assets:
                  Cash and cash equivalents                        $3,716                  $1,607
                  Marketable securities                                3,592                    4,114
                  Accounts receivable, net                              764                        700
                  Inventories                                                  396                        250
                  Deferred tax assets                                      185                        235
                  Other current assets                                    395                        143
                                Total current assets                    9,048                    7,049
                Marketable securities                                  4,954                    4,228
                Property, plant and equipment,
                 net                                                              1,631                    1,482
                Goodwill                                                        1,322                    1,230
                Deferred tax assets                                         451                        512
                Other assets                                                 1,040                        707
                                Total assets                              $18,446                 $15,208
                                        LIABILITIES AND STOCKHOLDERS' EQUITY
                Current liabilities:
                  Trade accounts payable                                $566                      $420
                  Payroll and other benefits
                    related liabilities                                    255                        273
                  Unearned revenue                                          275                        197
                  Income taxes payable                                    303                        137
                  Other current liabilities                            707                        395
                              Total current liabilities              2,106                    1,422
                Unearned revenue                                              146                        141
                Other liabilities                                            262                        239
                              Total liabilities                          2,514                    1,802
                Stockholders' equity:
                  Preferred stock, $0.0001 par
                    value; issuable in series;
                    8 shares authorized; none
                    outstanding at July 1, 2007
                    and September 24, 2006                                 --                         --
                  Common stock, $0.0001 par
                    value; 6,000 shares
                    authorized; 1,672 and 1,652 shares
                    issued and outstanding at
                    July 1, 2007 and September 24,
                    2006, respectively                                        --                         --
                  Paid-in capital                                         8,034                    7,242
                  Retained earnings                                      7,640                    6,100
                  Accumulated other
                    comprehensive income                                  258                         64
                              Total stockholders' equity          15,932                  13,406
                              Total liabilities and
                                stockholders' equity                 $18,446                 $15,208
                                                  QUALCOMM Incorporated
                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                        (In millions, except per share data)
                                                          (Unaudited)
                                                              Three Months Ended  Nine Months Ended
                                                                  July 1, June 25,  July 1, June 25,
                                                                    2007        2006        2007        2006
                Revenues:
                  Equipment and services            $1,484    $1,240    $4,196    $3,512
                  Licensing and royalty fees          841         711      2,369      2,015
                        Total revenues                      2,325      1,951      6,565      5,527
                Operating expenses:
                  Cost of equipment and
                    services revenues                        688         559      1,956      1,596
                  Research and development              454         395      1,348      1,126
                  Selling, general and
                    administrative                            401         293      1,155         795
                        Total operating expenses      1,543      1,247      4,459      3,517
                Operating income                              782         704      2,106      2,010
                Investment income, net                    190         120         572         336
                Income before income taxes              972         824      2,678      2,346
                Income tax expense                         (174)      (181)      (507)      (490)
                Net income                                      $798        $643    $2,171    $1,856
                Basic earnings per common
                 share                                          $0.48      $0.38      $1.31      $1.12
                Diluted earnings per common
                 share                                          $0.47      $0.37      $1.28      $1.08
                Shares used in per share
                 calculations:
                    Basic                                        1,670      1,675      1,661      1,661
                    Diluted                                    1,704      1,728      1,694      1,717
                Dividends per share paid              $0.14      $0.12      $0.38      $0.30
                Dividends per share announced      $0.14      $0.12      $0.38      $0.30@@end@@

@@start.t12@@                                                QUALCOMM Incorporated
                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (In millions)
                                                        (Unaudited)
                                                                 Three Months Ended  Nine Months Ended
                                                                  July 1,  June 25, July 1,  June 25,
                                                                        2007        2006        2007        2006
      Operating Activities:
      Net income                                                 $798        $643    $2,171    $1,856
      Adjustments to reconcile net income
        to net cash provided by
        operating activities:
          Depreciation and amortization                 99          69         283         190
          Non-cash portion of share-based
            compensation expense                            114         126         371         368
          Incremental tax benefits from
            stock options exercised                        (80)      (103)      (199)      (376)
          Net realized gains on marketable
            securities and other investments         (53)        (34)      (173)        (94)
          Non-cash income tax expense                  136         155         365         375
          Other items, net                                      15          22          16          57
      Changes in assets and liabilities,
        net of effects of acquisitions:
            Accounts receivable, net                      (45)      (126)        (62)      (140)
            Inventories                                          (49)        (42)      (147)        (81)
            Other assets                                          10            3        (137)         15
            Trade accounts payable                          (7)         34         127         140
            Payroll, benefits and other
              liabilities                                          68          45          69         (20)
            Unearned revenue                                  (18)         24          84          11
         Net cash provided by operating
          activities                                              988         816      2,768      2,301
      Investing Activities:
         Capital expenditures                              (157)      (182)      (571)      (556)
         Purchases of available-for-sale
          securities                                         (2,340)  (3,548)  (5,921)  (9,610)
         Proceeds from sale of available-
          for-sale securities                            1,909      3,473      6,254      7,916
         Other investments and acquisitions,
          net of cash acquired                                (3)      (120)      (230)      (390)
         Change in collateral held under
          securities lending                                (153)         --        (153)         --
         Other items, net                                        12          34          13          79
         Net cash used by investing
          activities                                            (732)      (343)      (608)  (2,561)
      Financing Activities:
         Proceeds from issuance of common
          stock                                                      220         155         474         623
         Incremental tax benefits from stock
          options exercised                                    80         103         199         376
         Dividends paid                                        (234)      (202)      (632)      (500)
         Change in obligation under
          securities lending                                 153          --         153          --
         Proceeds from put options                         17          11          17          11
         Repurchase and retirement of common
          stock                                                    (129)  (1,165)      (264)  (1,165)
         Net cash provided (used) by
          financing activities                              107    (1,098)        (53)      (655)
         Effect of exchange rate changes on
          cash                                                         --            1            2          --
      Net increase (decrease) in cash and
        cash equivalents                                        363        (624)    2,109        (915)
      Cash and cash equivalents at
        beginning of period                                3,353      1,779      1,607      2,070
      Cash and cash equivalents at end of
        period                                                  $3,716    $1,155    $3,716    $1,155@@end@@

    Web site: http://www.qualcomm.com

ots Originaltext: Qualcomm Incorporated
Im Internet recherchierbar: http://www.presseportal.ch

Contact:
John Gilbert, Vice President of Investor and Industry Analyst
Relations of QUALCOMM, +1-858-658-4813, or fax, +1-858-651-9303,
ir@qualcomm.com



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