Qualcomm at Citi Conference Notes

Steve Mollenkopf

5G is the next big thing

Sure, so, 5G is – it’s the next big step in cellular. I think it’s interesting for two reasons. One is it’s another generation of cellular technology. You essentially get higher speeds. You get advanced robustness, and so you’re setting up the business for the massive Internet of. You also get a number of features that make services that are very difficult to big mission-critical services essentially.

The network will begin to be absorbed by other industries

“the more interesting part I think is that this is the case, this is the time, and this is when cellular road map really starts to be absorbed by other industries beside cellular. So automotive, things like self-driving cars, the network that will be used for self-driving cars has a different set of circumstances and requirements than what you would have in just the case of just pure cellular, and that is replicated across a number of different verticals, healthcare, the industrial space.”

Commercial 5G in 2019

“You’ll start to see the first commercial devices in 2019. You can go to the store, buy a device with 5G in it in 2019. You’re already seeing people doing trials and early developments in the marketplace now. But the real standard compliance, new radio 5G will happen in 2019 time frame and we’ve been accelerating our plans for that.”

This is the first time that China is pushing not just waiting

“If I were to answer that same question a year ago, I would have said 2020, and it’s being pulled in part in The United States also in Asia. Interestingly, it’s not – this is the first time I’ve seen this happen with the G transitions, but I’ve been in a number of G transitions. This is the first time that China is not waiting, and they’re really wanting to go pretty aggressively as well.”

Not going to be a strong 5G player unless you were strong in 4G and 3G

“just like in the 4G transition, I don’t think you’re going to be a strong 5G player unless you were already a strong 4G and 3G player. And that has to do with the way in which the network will be deployed. It will be deployed with regional hotspots of 5G where maybe they have spectrum allocations, very favorable. They have millimeter-wave frequencies depending on the geography or the location, and it will be on top of a sea of 4G.”

Data center is being architected by big cloud providers for themselves

“So the data center is an interesting space for us because it’s going through a transition. And the transition, I think, there are at least three aspects of it that I would highlight. One, is the growth is happening in data centers that people are architecting and building themselves, meaning that these are the big cloud providers. They are building their own cloud areas, or they are offering cloud services broadly. And they want to have control over the architecture of the data center, and they want a willing partner that has scale and someone instead of just their normal option.”

Chinese cloud another big change in datacenter

“The second one is that you’re seeing the advent or the growth of the Chinese cloud. So China wants to have its own cloud, and we’re leveraging a joint venture in China that’s Guizhou to participate in the growth of that cloud. So as a new participant in the data center space, we want to figure out how do we build scale and get some of these big trends, get on the front-end of these big transitions, so we’re doing that”

First time in a long time that transistor leadership is not happening in the PC space first

“And then the second – the third one, the final one is that this is probably the first time in the history of semiconductors where transistor leadership is not occurring in the PC space first. So we’re seeing through Samsung and TSMC particularly extremely competitive just raw transistor capability, which we think enables us to compete not only in the handset space, but we can leverage that investment to see it – a real disruption, we think, competitive disruption, in the data center space.”

Qualcomm 2Q17 Earnings Call Notes

Steve Mollenkopf

Millimeter wave will be table stakes for 2019 5G launches

“We now believe that both millimeter ways and sub-6 gigahertz capability will be table stakes for 2019 5G launches. The modem technology and complexity is increasing and we believe we can continue to outperform our competitors with our level of 5G innovation. It is clear that our technology position and product roadmap are strong as they have ever been.”

Derek Aberle

Expecte global growth in 3G 4G devices to by 6%

“For calendar 2017 3G, 4G device shipments, we continue to estimate shipment of 1.75 billion to 1.85 billion devices globally, up approximately 6% year-over-year at the midpoint.”

ASP declines moderating as Chinese OEMs build their businesses outside of China

“ASP declines are moderating even more than we expected meaning the declines are less than we would have expected going into the year. And that’s largely being driven by strength in China as well as increasing ASPs by many of the Chinese OEMs as they build their businesses outside of China, which are couple of the important trends that we highlighted starting 2 or 3 years ago of why we believe we would see long term growth in the market. So again, if you wrap that all up end market will continue to grow, we think it can continue to grow meaningful.”

Qualcomm at Bank of America Conference Notes

Cristiano Amon – EVP of QUALCOMM Technologies

The smartphone took away the entire portable consumer electronics industry

” mobile is so big of an industry, the smartphone is so big of an industry that the point it became the new consumer electronics industry, it took away the entire portable consumer electronics industry that use to exists in the ’80s and the ’90s from cameras, to music, to video, to gaming, to everything. And that technology platform is so competitive that it is going to go into how car infotainment is going to look like, how machines become smart running OSs and connecting with modems and the Internet of Things.”

Specifics of 5G makes it harder to get in if you’re not a leader in 4G

“On top of that you have two variations of 5G, in the sub 6 gigahertz spectrum, you’re going to provide multiple units of gigabit, let’s say five gigabit for example. And then above that in the millimeter wave you’ve going to have multiple tens of gigabit. And 4G will continue to become very relevant as it gets upgraded to Gigabit LTE lower latency and it will have lower latency as we migrate up and down. So I’ll argue, if you don’t have leadership in 4G, because 4G is not static, it’s not like what happened with GSM as 3G arrived. If you don’t have leadership in 4G, our ability to continue in 4G, if you don’t have a system capabilities to do multimode devices and if you don’t have the scale to deal with alphabet soup of frequency bands, I think 5G is actually much harder for you to enter the market. ”

Qualcomm FY 2Q17 Earnings Call Notes

Derek Aberle

1.7 billion 3G/4G devices shipped in 2016

We estimate that approximately 1.7 billion 3G/4G devices were shipped in 2016, up approximately 10% year-over-year. For calendar 2017, we are reaffirming our estimated global 3G/4G device shipments of 1.75 billion to 1.85 billion devices, up approximately 6% year-over-year at the midpoint.

Miscellaneous Earnings Call Notes

Yahoo’s (YHOO) CEO Marissa Mayer on Q2 2016 Results

Marissa Mayer is proud of the last four years

“As we work to conclude the strategic alternatives process, this groundwork will serve as a solid foundation for Yahoo!’s next chapter. I am proud of what this company has achieved of these past four years. I remain committed to our team and our company and I continue to be optimistic and passionate about the future of Yahoo!”

W.W. Grainger (GWW) Q2 2016 Results

Laura D. Brown – Senior Vice President-Communications & Investor Relations

June selling volume down 3%

“There were 22 selling days in June of 2016, the same as 2015. Company sales were flat in June versus the prior year. The sales performance included 4 percentage points from acquisitions, offset by a 3 percentage point decline from volume and a 1 percentage point decline from price. In the United States, June daily sales decreased 3%, driven by a 4 percentage point decline from volume and a 1 percentage point decline from price, partially offset by 2 percentage points from intercompany sales, primarily to Zoro. June customer end market performance in the United States was as follows: retail was flat; light manufacturing, government and commercial were down in the low single-digits; heavy manufacturing was down in the mid-single digits; contractor was down in the high single-digits; reseller was down in the mid-teens, and natural resources was down in the high-teens.”

Mattel’s (MAT) CEO Chris Sinclair on Q2 2016 Results

Kevin Farr

Brexit will have minimal impact on current results

“Brexit will only have a modest impact on our full year results. Based upon current trends, we believe the negative impact from foreign exchange will be roughly $0.02 to $0.05 of EPS for the year related to Brexit.”

QUALCOMM’s (QCOM) CEO Steve Mollenkopf on Q3 2016 Results

Favorabale demand for chipsets, especially in China

“In QCT, the favorable demand trends for our new chipsets across the mid and high-end smartphone tier, especially with the top 10 vendors in China are helping to deliver improved financial performance. We are also seeing incremental demand for our lower tier chipsets in China versus our prior expectations driven in part by our differentiated all mode and modem leadership.”

5G deployment may have been pulled forward to 2018/2019

” In general, we are obviously trying to drive 5G as quickly as we can. It’s an area which we think to be a strong player in 5G, you have to be a strong player in 4G, 3G and WiFi and consequentially we think that we will maintain a very strong IP position moving forward. The standards bodies are working on that right now. So, I think we have a lot of visibility into the strength of our submissions as well as to how the industry is unfolding. I think in general, if you’d have asked me that question, a year ago, I would have said that it would have happened closer to 2020. Certainly over the last year and accelerating here over the last quarter there has been a real pull to push that in or to pull that in closer to 2018/2019 timeframe depending on what the deployment is.”

Cohen & Steers’ (CNS) CEO Bob Steers on Q2 2016 Results

Joe Harvey

Markets sending seemingly inconsistent signals

” Markets expressed seemingly inconsistent expectations as the quarter progressed. The 10-year treasury yield declined to 1.5%, suggesting slow growth, disinflation and a flight to safety amidst Brexit concerns. Yet, oil and commodity prices continued to rally. These conflicting signals are hard to reconcile, especially in light of our view that inflation should accelerate towards 4% into 2017, driven by rising energy, rent and food prices. While part of the inflation bump should be temporary, rising wages, prospects for additional central bank and fiscal stimulus and a likelihood that commodities have entered a new bull market, suggest to us that the positive market performance in real assets will continue, while the fixed income bull market has less and less room to run”

Brexit will long term be good for the UK

” I think that Brexit over the long-term will be good for the UK. It will result in some short-term pain, probably a brush with recession. But long term, I think it’s good that they can control their own destiny apart from being tied to Europe. And in terms of commercial real estate in the UK, we are expecting prices to decline anywhere from 5% to 15% or 20% depending on the property type and the biggest declines are being expected in the office market. ”

D.R. Horton (DHI) David V. Auld on Q3 2016 Results

David V. Auld – President & Chief Executive Officer

Optimistic about CA but also Texas

“Bob, the growth we’re looking at there is at a new price point that hasn’t existed out there. And we feel very optimistic based upon the land that we’ve been able to put in front of that program. So do we feel more optimistic about California than the balance of the country? Absolutely not. I think Texas continues to be strong and our Southeast area just continues to outperform”

Qualcomm FY 2Q16 Earnings Call Notes

QUALCOMM (QCOM) Steven M. Mollenkopf on Q2 2016 Results

Derek K. Aberle – President

Reducing estimates for device shipments

“We are adjusting our estimate of calendar 2016 global 3G/4G device shipments to 1.625 billion to 1.725 billion devices, with year-over-year unit growth of approximately 8% at the midpoint, down from our previous midpoint estimate of approximately 10% growth. The strong 4G ramp in China continues, as each of the operators pursues aggressive subscriber growth targets with their 4G-plus service offerings, and design momentum is moving rapidly towards all-mode devices across China. The strength in China, however, is being offset by a reduction in growth rates in other emerging regions, which we believe is attributable to macroeconomic headwinds. In addition, our forecast for premium-tier device shipments is down slightly versus our prior view, driven by slower than expected upgrades within one of the premium-tier ecosystems.”

Cristiano R. Amon – EVP, Qualcomm Technologies, Inc.-President, Qualcomm CDMA Technologies

Internet is becoming wireless, 4G has matured in developed markets

“I think one of the things is more the Internet is becoming wireless, and you see the 4G transition becoming more mature in developed markets. You see carriers now competing for premium customers. And the transition that we’ve been talking about, LTE to carrier aggregation, I think that’s actually growing faster. So I think you’re starting to see gigabit LTE modem that we demonstrated. And we will see from that one, the user from licensing spectrum with the global standard, I think was mentioned by Steve, the LAA, and maybe within the next two to three years an accelerated timeline of deployment of 5G. As we continue to invest and we see those technology transitions ahead of us, we feel very confident that the whole nature of the market is probably going to demand the latest technology and the key devices.”

George S. Davis – Chief Financial Officer & Executive Vice President

Chinese consumers are shifting from low end to high

“Sure. On the MSMs, as you look at year over year, there’s definitely a significant delta from one major customer that is contributing. And what you’re seeing in China is a shift in low/entry to mid and high, and so it’s one of the reasons why you’re seeing strong pickup in revenue per MSM in the quarter. So it’s a story more of mix shift. It’s pretty neutral outside of that. And so the low tier units, they tend to be more of those low-tier units that we’re trading off, but we’re picking up a significant amount of mid-high.

Miscellaneous Earnings Call Notes

McDonald’s (MCD) CEO Steve Easterbrook on Q4 2015 Results

Our turnaround is starting to take hold

“I am confident in the actions we are taking and attraction is beginning to take hold. Most importantly, customers are noticing a difference. Our customer feedback systems are showing improvements in many important aspects of the customer visit, including food quality, order accuracy, speed and friendliness.”

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q4 2015 Results

Paul Burdiss

Don’t expect credit deterioration in anything besides energy

Well I mean, I guess the short answer is until we see the non-energy economies start to really fray, but we’re not seeing that we — and I don’t think we’re going to venture a guess as to when the cycle really starts to et cetera, we’ll actually do that but I think suffice to say that at the moment we continue to see improvement and even in markets like, in a market like Texas the non-energy portfolio remains very healthy. We are looking at a lot of indicators in each of those portfolios to kind of watching for problems and so far it is not really showing up.”

Michael Morris

All domains continue to perform well and metrics are all solid

No, I can’t add anything to that, all domains consumer, retail, mortgage, small business, large commercial they all continue to perform well and metrics are all solid.

W.W. Grainger (GWW) Q3 2015 Results

Macroeconomic conditions are well understood

“The macroeconomic conditions faced by our industry in 2015 are well documented and largely understood.”

DuPont’s (DD) CEO Ed Breen on Q4 2015 Results

There is always cost saving

“Look, there is always cost savings. I mean I am a believer that they occur every year in a few percent range, as you keep streamlining your company, I would say. So, you are never done with it.”

Dow is already on IT systems that we were implementing

“we’re on a very fragmented IT system. One of the benefits it looks like we obviously get here with the Dow merger is Dow is on the IT platform that we were going through the global — actually latest revision of the SAP platform”

Fourth quarter was actually our best organic quarter of the year

“It’s interesting to note though that — and I don’t want to say there is a trend here, but our fourth quarter organic revenue was actually our best of the year. We had been running kind of minus 3% through the first nine months of the year and we are minus 1% in the fourth quarter. And if you kind of look at it around the geographies, it was kind of flat in Latin America, flat in North America, pretty flat in Asia and our one down market was Europe which was down about 2%. So, we’ll see how the trend goes here in the first half of the year but that was little bit encouraging that we saw that lift.”

Brown & Brown (BRO) Powell Brown on Q4 2015 Results

Small businesses still trying to understand ACA

“We define small employee benefits as employers with less than 100 employees. For this segment we are continue to see companies be very focused on managing their costs and trying to understand the implementation complexities of ACA, specifically how they manage costs via exchanges and/or private plan.”

Do expect rates to remain under pressure. A lot of activity in M&A but prices remain high

“We do expect rates in ’16 to remain under pressure and are watching the economy very closely for signs of further expansion or contraction. From an M&A perspective there’s a lot of activity out there. We’ve seen a number of announcements in 2015, maybe the most active year of acquisitions ever. We can tell you that prices remain high, some at levels that don’t make sense to us. However, we continue to look for partners that fit culturally and make sense financially”

AK Steel Holding’s (AKS) CEO Roger Newport on Q4 2015 Results

“the steel industry continues to face significant challenges as we enter 2016. These challenges include continued pressures in the global steel industry as the result of the massive oversupply steel primarily from China, that direct and indirectly impact others oversupply in all regions of the world and otherwise AK Steel is not a major player in the oil country tubular goods business, the significant downturn in that market is contributing to the excess capacity in those markets in which we do compete and to the overall steel market. As we have been stating for several quarters now, the steel market in the United States has been flooded with what we believe are unfairly traded imports. While the import levels have indeed began to decline for many of those countries where preliminary duties are being levied, we still face significant ongoing import pressures.”

Tupperware Brands (TUP) CEO Rick Goings on Q4 2015 Results

Turkey very weak

“Turkey, very disappointed. It was down 25% and much like France it’s been heavily impacted by externals, particularly the terrorist attacks, military activity, there is political instability which has just been almost bipolar from the President almost being voted out of office in June to getting a majority back again just over the last two months. So that’s we’ve seen weakened concurrency and there is a lot of change in consumer behavior in spending.”

I might be concerned if I were selling cars in China, but I think we’re ok

“Also I would say in China for all the news you really hear about that, I think if I was selling cars I might be concerned, but at the lower, we’re again a multi-local business, I think we’re in good shape there.”

It isn’t business as usual out there

“we don’t look at it as a crisis but isn’t business as usual out there”

Qualcomm’s (QCOM) CEO Steve Mollenkopf on Q1 2016 Results

Qualcomm talking about strong volumes

“QCT chipset shipments were near the high end of expectations, with low tier strength across OEMs particularly in China, offsetting some weakness in thin modem sales at a key customer. QTL revenues were higher than expectations on strong 3G/4G device volumes and ASPs and we continue to make progress in signing up Chinese licensees, although there is still more work to be done on that front.”

Lots of industries are looking to leverage mobile technology into their products

“At the Consumer Electronics Show earlier this month, it was clear that many industries are looking to leverage mobile technology into their products and businesses are looking to the leaders in communications and computer systems, such as Qualcomm, to make the world more connected and smarter. Our many announcements at the show reflect our progress extending Qualcomm technology into adjacent and new areas, including automotive, IoT and networking.”

PulteGroup’s (PHM) CEO Richard Dugas on Q4 2015 Results

The volatility does change the way management teams think about their businesses at the margin

“All that being said we are well aware of the volatility in the world today. From concerns of our global economic conditions to the swoon in oil prices, to gyrations in the stock market, the day-to-day swings can be violent. The reality is however that we can’t control any of these factors, what we can do is focus on running our business, consistent with the goals we have established and disciplines we’ve demonstrated. This means acquiring well-located communities that we believe can deliver high returns on investment. It also means hedging our bets by using more land options, where possible and focusing in on smaller, shorter duration projects, where we can get our capital back quickly. It also means, not over leveraging the balance sheet and keeping one hand on the lever to slow investment if housing demand begins to change. And finally, it means having the discipline to systematically give excess funds back to shareholders, rather than trying to force investments in the system. ”

Ford Motor’s (F) CEO Mark Fields on Q4 2015 Results

We are a mobility company

“Well to answer your question Joe when you look at where we’re heading we said we were transforming into an auto and a mobility company because it’s really important that we don’t lose sight of our core business as I mentioned on our remarks upfront.”

China is going from an industry led economy to one that’s consumer led

“In China obviously as we mentioned, when you look at the stock market volatility, that’s endemic of the country that’s moving from an investment and industry led economy to one that’s consumer led. And actually when you look at the components of GDP growth there, the services in the consumer portions of that are actually growing while some of the industry ones are coming down and we view that as a good sign.”

Marion Harris

Not seeing any uptick in delinquencies in the US

“Colin, this is Marion. No, we’re really not. I know there is a lot of discussion about this, but with the exception of the trend in longer term financing we’re not seeing any weakness in the consumer alone. In fact delinquencies which are a leading indicator were at an all time record low for us.”

Las Vegas Sands’ (LVS) CEO Sheldon Adelson on Q4 2015 Results

Adelson thinks we’ve seen stabilization in Macau

“We do see stabilization in gaming revenue trends. In the mass gaming segment, our non-rolling drop was down just 1% over the prior quarter, despite new competition that has predominately focused on the mass market. Our VIP rolling volumes were actually up 5% over the prior quarter outperforming the 2% sequential increase in the Macau market.”…”I thought we had either hit bottom in the mass market or we are bottoming out. Ever since I said I’ve been reading the issues, I’m been reading from analyst reports and from other Sands China reports that I get daily, other clippings that people are starting to believe that and some of the numbers put out and experienced through December and January indicate to me that that’s the case.”

Steel Dynamics (STLD) Mark D. Millett on Q4 2015 Results

I think there’s positive momentum

“Well, I think there’s positive momentum, generally. I’m sure Dick can speak to some of it, but the inventory overhang, there’s continued destocking there and it’s becoming balanced. It’s still relatively high, particularly in hot band. But in coated products, in coated sheet, I think it’s getting into a good position. And you speak to a seasonal uptick. I think we’re seeing that as well.”

Theres tightness forming in cold roll sheet

“On cold roll sheet and coated, I sense a tightness forming in that arena. I think it’s a combination of – the automotive arena is strong. So, the integrated mills got a relatively good order book. Construction continues to come back. There’s some destocking going on. And we have some relief from the trade cases and erosion of import levels.”

United States Steel’s (X) CEO Mario Longhi on Q4 2015 Results

Automotive continues to be a good market, appliance and construction markets should also grow

“Now I would like to give a brief summary of what we are seeing in our markets and our guidance for 2016. The automotive market continues to be a very good market for us and we expect it to remain strong throughout the year. We also expect growth in demand in the appliance and construction markets compared with last year. Industrial equipment market is mixed with a slight improvement in demand for construction equipment, steady demand in the railcar markets and weakness in mining equipment. In the energy markets, low oil prices and rig counts remain a significant headwind. At this time, we do not see any catalysts other than increase in oil prices that would drive significant improvement in tubular demand and pricing with impacts to both our tubular and flat-rolled segments. We continue to expect slight growth in the automotive, appliance and construction markets in Europe as compared to last year but tin mill products may be facing increasing challenges from imports.”

Qualcomm FY 4Q15 Earnings Call Notes

QUALCOMM (QCOM) Steven M. Mollenkopf on Q4 2015 Results

Device shipments should grow 10% in 2016

“We estimate that global 3G/4G device shipments will grow approximately 14% in calendar 2015 and 10% in calendar 2016 at the midpoint, driven primarily by the migration to 3G/4G devices in emerging regions and cellular connectivity growth in adjacent segments outside of handsets.”

Decline in ASPs due to heavier discounting in premium devices and share gains by Chinese OEMs

“We expect global 3G/4G device ASPs to decline at a more moderate rate in fiscal 2016 versus fiscal 2015, although still at a higher rate than we expect over the longer term. This outlook reflects a number of factors including heavier than normal discounting of high premium tier devices in the near term and continued share gains by Chinese OEMs that are currently selling at lower prices than other licensees. Over the longer term, we expect ASP declines to moderate for a variety of reasons including OEM consolidation in China and increasing device ASPs by Chinese OEMs, as well as users in emerging regions replacing devices at higher price points.”

Chinese OEMs are making it difficult to collect royalties

“the negotiations with a handful of these licensees are taking longer than we previously expected. In some of these cases, although the licensees acknowledged they need to pay royalties to QUALCOMM, we believe in connection with the negotiations they have stopped reporting certain of their sales and royalties or did not report their sales and royalties in a manner that allows us to record revenue.”

We think we’re well positioned for 5G because it uses 4G as an anchor

“On 5G, a couple things on 5G. First, when we look at 5G, we look at that as an area where it will be a continuation of – we think the strength that we’ve had in 4G will also transition over to 5G. One of the reasons is that the anchor bands or the anchor, 5G actually uses a 4G anchor. I think there’s pretty well – a pretty good alignment at the physical layer on how we put things together. We are obviously contributing a lot on 5G. 5G compared to maybe 3G and 4G, there are probably fewer companies really carrying the load there. We’re certainly one of them.”

Will start to get more of a replacement market going in emerging regions

“as we see more of the growth in the future coming from the emerging regions, we’re going to get to a place, probably starting next year, where there’s more of a replacement market in the emerging regions as opposed to the first migration from 2G to 3G/4G. And that will have a moderating effect on ASP declines over time.”

We feel very strong in lower tier. It’s “comfortable” at the higher tier

“I think the competitive dynamic, it’s still a very competitive market, particularly at the low tier. We consider ourselves to be in a very strong position there. I feel good about our competitive position. At the higher tiers and particularly in the areas where people want to have international launches, I think our position, it feels quite comfortable. That being said, there are a lot of people going after this market. It’s an attractive market, but I think it’s getting harder and harder for people to have the breadth of technology to deliver on all of these products.”

We tend to be multiple generations ahead of competitors in modem

“on the modem side, it’s obviously a strength of QUALCOMM’s. We tend to be several if not multiple generations ahead of our competitors, primarily on feature set, but also on maturity, geographical breadth. And those are important things when you’re talking about dealing particularly with worldwide OEMs, and it’s an area that we obviously defend very rigorously. ”

It will be increasingly important to have products on both licensed and unlicensed bands

” The other aspect that’s happening and will play out over the next couple of years is that the importance of having RF, the access to multiple bands, the ability to deliver products not only in the licensed bands but in the unlicensed bands will continue to become, actually will increasingly become more important, and those things will be table stakes by the time you get to 5G. Now we’re driving to have those things happen as quickly as we can.’

Qualcomm FY 3Q15 Earnings Call Notes

Six initiatives to realign the company

Our strategic realignment plan is designed to enable us to extend our core strengths and deliver value for our customers and stockholders in more efficient and powerful ways. The plan has six key initiatives: number one, aggressively right-sizing our cost structure; number two, reviewing financial and structural alternatives that are available to us that may create stockholder value; number three, reaffirming our intent to return significant capital to stockholders; number four, adding new directors with complementary skill sets while reducing the average tenure of our board; number five, further aligning executive compensation with performance and stockholder return objectives; and number six, making disciplined investments to further our leadership positions and build upon our core technologies and capabilities.”

We have been working with a consultant to reduce costs

“we have been working with an independent third-party consultant to conduct a comprehensive review of our cost structure across the company. Based on the results of this review, we are taking actions to substantially reduce costs”

Reducing share based compensation grants

“we are reducing share-based compensation grants across the company. Annual share-based awards will come down by $300 million. To be clear, this $300 million reduction in share-based awards is in addition to the $1.1 billion in other cost reductions. ”

Going to buyback 10B worth of stock

“We remain committed to returning at least 75% of free cash flow to stockholders through dividends and buybacks. In March, we announced that we will repurchase $10 billion of common stock before March 2016.”

8.5 b smartphones should ship between 2015 and 2019

“Cumulative smartphone unit shipments are forecast to be more than 8.5 billion between 2015 and 2019, according to IDC, and we are growing our share of content within devices with new technologies. ”

networking, mobile computing, IoT and automotive are areas of focus

“We have identified networking, mobile computing, IoT, and automotive as the highest return areas and will focus our investments there. In fact, we continue to expand our investment in these growth areas.”

Our design traction in premium tier has not changed

“our design traction in the premium tier has not had any change. So we did cite that we had lower volumes at one vertical OEM, which you could describe it as share loss. But overall, it’s really the fact that we have this concentrated environment and a very large impact on a number of our premium tier customers as a result of that. The other piece is we cited in China that certain handset models using our chipsets had lower demand than was forecasted going into the quarter.”

The whole industry is having trouble making money at the low tier

“”With respect to the low tier, I think the entire industry is actually challenged in terms of making money at the low tier. We’re probably in a better position than most because of the ability to leverage our IP roadmap across the tiers. We’re making some changes in this realignment plan where we’re doing work to try to get the cost per head more in alignment with some of our competitors. But we still think it’s an interesting opportunity for us to go after. And as George mentioned, we are assuming that this aggressive price environment continues with respect to our planning assumption on the realignment plan.”

Qualcomm at Merrill Lynch Conference Notes

Steve Mollenkopf – CEO

I think we’ve benefited a lot from the fabless model

“I think the fabless model served us well actually. The ability to concentrate our R&D dollars in the area that gives us differentiation is very important. I think it’s also different in the handset business, the market dynamics, and the difficulty in managing fab utilization with just the dynamics of the market, how quickly mix can change, how quickly the market can change. It is very different then let’s say the PC space for example. And I think it will be very difficult to match those things and we’ve benefitted I think a lot from the fabless model.”

Pleased with the transistor roadmap from Samsung and TSMC

” The transistor roadmap that we are seeing from TSMC and from Samsung, we are pleased with it. I think it actually it gives us a strong competitive position. I remember the transistor is not just speed and things it’s actually about density, its cost, it’s the ability to do RF in the same design.”

These phone launches are like movie launches

” these new phone launches are almost like movie launches. They have a very, very concentrated marketing period. They sell a lot of devices in a short period of time and they launch worldwide on the same day or roughly the same day.”

Low end handsets on even a faster product cycle

“the thing that always surprises people is at the low tier of particularly China it is on a fairly fast product cycle. Every six months or so it turns over to a different chip.”‘

A challenge for us is how do we diversify outside of handset over next 5-10 years

“I think one of the challenges for Qualcomm is how do we add significant businesses outside of the handset space that provides a diversity gain that I think we’ll need. And part of the challenge for the next 5 years and next 10 years is how do we deliver on both the extension of our current business in adjacent markets and then what markets do we go into that are new.”

Data-center is one area

“We have recently announced last November we announced that we are going to move to the datacenter. We knew it was going to be a long play, it is something that we are going to have to grow in order to be successful and new capabilities that we are going to have but things that play to our core competency, but allow us to grow into new markets and can we go into using M&A.”