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.