qualcomm annual reports 1999


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

qualcomm annual reports 1999

  1. 1. 99 Annual Report QUALCOMM Big Ideas enabled by CDMA HDR High Data Rate Technology The Internet Unleashed
  2. 2. There’s something pretty Our people are creative thinkers. the campus-like environment at special about the people here Resilient. Flexible. Innovative. our headquarters in San Diego, at QUALCOMM. We’re fortunate to We have over 1,000 patents California. Recreational facili- have a world-class workforce. issued or pending. But there’s ties mixed in with offices and Sixty-one percent of our employ- more to QUALCOMM than technol- labs. Plenty of places for people ees have college degrees. ogy. There’s a culture here that to gather and talk. We welcome Twenty-five percent have one celebrates knowledge and exploration here. or more graduate degrees. achievement. You can feel it in
  3. 3. We believe education is a global and science careers. In fact, philosophy. If it hasn’t been done, riority. That’s why we have over QUALCOMM supports the com- we’ll do it. If it has been done, 00 different training programs munity through many outstanding we’ll strive to do it better. That’s or our employees around the volunteer and philanthropic the spirit of invention. That’s world. We’re dedicated to inspir- activities. It’s amazing what you QUALCOMM. ng young students and teachers can do when you put your mind n the community to pursue math to it. That’s at the heart of our
  4. 4. 02. 04. 14. Who we are: Letter to shareholders: What we do: the sum of our parts financial milestones creating value 22. 24. 26. 27. The heart of our company: Licensing our technology: Business development: The road to the future: CSM and MSM wireless partners market drivers continuing technology 28. 33. Year at a glance: Financial information: summary of news releases table of contents 63. 62. Board of Officers and directors corporate information Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. QUALCOMM’s future results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not specifically limited to: the ability to develop and introduce cost effective new products in a timely manner, avoiding delays in the commercial implementation of the CDMA technology; the risk that the rate of growth in the CDMA subscriber population will decrease; risks associated with the scale-up, acceptance and operations of CDMA systems, including HDR technology; risks associated with component shortages; risks associated with strategic opportunities or acquisitions, divestitures and investments the Company may pursue; risks related to the ability to sustain or improve operational efficiency and profitability; risks relating to the success of Globalstar; developments in current or future litigation; the Company’s ability to effectively manage growth and the intense competition in the wireless communi- cations industry; risks associated with vendor financing; timing and receipt of license fees and royalties; risks associated with international business activities; and risks related to customer receivables and performance obligations, as well as the other risks detailed in this annual report and in the Company’s Form 10-K for fiscal year ended September 26, 1999. The Company’s con- solidated financial data includes QPE and certain other consolidated subsidiaries of the Company.
  5. 5. QUALCOMM is a company full of people with big ideas. Those ideas lead to technology and products that help people communicate. Behind every phone, integrated circuit and satellite ground station is an innovative way of problem solving. Take Code Division Multiple Access (CDMA) technol- ogy for example. We had an idea for creating a better form of digital wireless communications. CDMA is widely available and used by more than 41 million people today. We believe it’s only a matter of time before CDMA becomes the communications technology of choice for most major wireless operators around the world. Big ideas create big opportunities. And opportunities open the door to creating value for our customers, employees and shareholders. That is why QUALCOMM will continue to innovate and lead. 01
  6. 6. WHO WE ARE QUALCOMM is a leading supplier of digital wireless communications products and services and is the innovator of CDMA, a digital technology that has become the fastest-growing digital standard for the wireless communications industry. QUALCOMM is proud to employ many of the best people in the industry. The Company is headquartered in San Diego, California and has offices in 13 countries around the world. QCOM Since its founding in 1985, QUALCOMM has developed and commercialized innovative communications technologies that benefit people. Today, the Company earns revenues through manufacturing, licensing its technology and operating advanced communi- cations systems. 02
  7. 7. QCT is a leading developer make small, fast and func- QUALCOMM CDMA TECHNOLOGIES and supplier of CDMA* chip- tional digital wireless phones sets and software solutions and network infrastructure QCT for wireless voice and data equipment. To date, more products. The division than 200 million chips have provides manufacturers been shipped to CDMA man- with tools and support to ufacturers worldwide. QTL generates fees and equipment. Many of our QUALCOMM TECHNOLOGY LICENSING ongoing royalties from licensees are now contri- the worldwide sales by buting to worldwide CDMA QTL QUALCOMM licensees of growth using QUALCOMM CDMA phones, chipsets, intellectual property rights. infrastructure and test QWS includes two busi- Systems provides gateways, QUALCOMM WIRELESS SYSTEMS AND WIRELESS BUSINESS SOLUTIONS nesses. Wireless Business phones and contract ser- Solutions is responsible for vices primarily for the QWS the OmniTRACS® family of Globalstar™ system. information management systems for the transporta- tion industry. Wireless QCP designs, markets Electronics, is one of the QUALCOMM CONSUMER PRODUCTS and manufactures CDMA world’s largest manufactur- digital wireless phones ers of CDMA digital phones. QCP that incorporate a variety QUALCOMM announced the of features and crystal clear sale of its phone business voice clarity. QUALCOMM to Kyocera Corporation of Personal Electronics, our Japan in December of 1999. joint venture with Sony QUALCOMM DIGITAL MEDIA, QDM develops enabling broadcast capability and EUDORA AND HDR technologies for processing end-to-end encryption. Eudora® our highly popular digital media, including a , QDM digital cinema delivery e-mail software, is now mar- system for motion picture keted in three user-selected distributors. QDM also devel- modes. And we continue to ops technology and products develop and commercialize for the U.S. Government, our HDR technology to offer including secure CDMA high-capacity, high-speed wireless phones with net wireless data applications. 03 * Code Division Multiple Access technology is the digital wireless communications technology pioneered by QUALCOMM that has become a recognized world standard for the telecommunications industry.
  8. 8. TO OUR SHAREHOLDERS This has been a year of transforma- After a decade of successful innovation, QUALCOMM continues to be one of tion and success for our Company. America’s fastest-growing companies. Wireless communication has proven The digital wireless communications to be a very popular concept and we’re delivering products and services technology we pioneered—CDMA— that people really want. We are creating technology innovations embodied has become a world standard for in chips and are consistently delivering each new generation chipset on mobile communications. schedule. This has enabled CDMA to become the fastest-growing tech- nology in our industry. CDMA is used in cellular, PCS and wireless local loop systems both QUALCOMM is the world leader in the development and sales of CDMA terrestrial and satellite-based. chipsets and system software solutions. We achieved significant market share, making QUALCOMM the second largest digital handset manufacturer More than 35 countries use our in North America. As the innovator of CDMA, we benefit from licensing and technology, and we expect this royalty fees for any CDMA product sold by a licensee. There are now more will expand as the next generation than 75 leading telecom manufacturers around the globe licensed to build of CDMA unfolds over the next and sell products based on cdmaOne™ technology. In September, FORTUNE few years. magazine moved QUALCOMM up from the 74th position to number 16 on its We had our first ever billion dollar list of America’s Fastest-Growing Companies. quarter and total annual revenues Growing Demand of $3.9 billion. This year, our stock performance and revenue growth Substantial growth has been driven by the recent acceleration of phone helped us gain entry to the S&P 500 shipments by QUALCOMM and its licensees to satisfy strong demand in Index and the 1999 FORTUNE 500 ® list. North America, Latin America, South Korea and Japan. Over 41 million people worldwide subscribe to CDMA wireless telephone service today. Winning Ideas Not only has the number of subscribers been going up rapidly, but the Each one of our employees has con- amount of minutes they use is on the rise as well. Thanks to increased tributed to QUALCOMM’s continued competition between wireless service providers, discounted rate plans success in the global marketplace. are bringing down the cost per minute that customers have to pay. Our people are creative and innova- CDMA demand is growing rapidly around the world, and there was strong tive thinkers who are applying evidence of that this year in Japan when the first nationwide all-digital technology to enrich people’s lives. network rolled out in April of 1999. The country’s two major carriers, DDI As a result, today our Company holds and IDO, joined forces to make the launch possible, and soon they will more than 350 U.S. patents with merge, along with KDD, to form a unified carrier. They demanded strict about 800 more pending. specifications for their phones, and QUALCOMM was first-to-market with the chips that enabled Japanese handset manufacturers to surpass the specifi- cations and facilitate an on-time launch of the national network. Consumer advertising campaigns in Japan coined the term “super digital” to describe CDMA capabilities. 04
  9. 9. QUALCOMM Stock Price Performance Compared to the Standard and Poor’s Index for Calendar Year 1999 3,000% QUALCOMM +2616% (Nasdaq: QCOM) 2,500 2,000 Stock Split 1,500 1,000 500 Stock Split S&P 500 +19.53% 0 01 02 03 04 05 06 07 08 09 10 11 12 99 (Data Source: Bridge Systems) 05 This was a year of big oper- market for products and ating earnings growth and services based on CDMA, improvements for QUALCOMM. the digital wireless com- A key driver for us has been munications technology the growing worldwide we pioneered.
  10. 10. 100 BEST 100 BEST 1 0 0 F A S T E S T- MANAGED C O M PA N I E S T O W O R K G R O W I N G C O M PA N I E S FOR IN AMERICA™ IN AMERICA™ C O M PA N I E S 100 06 This was a year of big their top 100 list for exempli- recognition for our Company. fying the highest level of FORTUNE named QUALCOMM operational and strategic number 16 on its list of excellence. And, for the sec- America’s Fastest-Growing ond year in a row, FORTUNE Companies. It recognizes magazine ranked QUALCOMM companies with 30% growth one of the 100 Best Companies in revenue and earnings To Work For In America. h h
  11. 11. Evolving Strategy & Structure standard and have entered into patent cross licenses. The cross licenses are royalty-bearing for CDMA subscriber units sold by either party. As part From the day we first suggested that of the deal, Ericsson purchased certain assets of our terrestrial CDMA wire- CDMA technology offered a better less infrastructure business located in San Diego, California and Boulder, way to transmit wireless voice and Colorado. The infrastructure business met its strategic goal of driving data, the key to the growth of our CDMA forward into new markets. Ericsson is well equipped to enter CDMA business hinged on whether or not markets around the world and take this business to new levels of revenues the worldwide telecommunication and profitability. standards bodies shared our enthu- siasm. Organizations such as the QUALCOMM continues to provide leading edge chipsets and system software International Telecommunications to a wide range of infrastructure manufacturers. We entered into a major Union (ITU) and others are focused agreement with Lucent to provide 3G CDMA chipsets and software for their on determining the future world infrastructure base station equipment. QUALCOMM patents will be at the heart standard, the so called third of the next generation of CDMA technology for wireless communications. generation (3G) for wireless As part of our continuing effort to improve operations and focus on our core communications. competencies, we also made the strategic decision to examine alternatives, With global profits at stake, it is including the sale of our phone manufacturing business. As carriers consoli- not surprising that competing manu- date, the price they charge for phones goes down. We expect this to put facturers fiercely asserted that their additional downward pricing pressure on manufacturers. We therefore Intellectual Property Rights (IPR) determined the timing was right to seek buyers for QCP. On December 22, should be accepted as the 3G 1999, we announced an agreement with Kyocera Corporation to transfer standard. QUALCOMM’s primary our phone manufacturing operations and customer commitments. Kyocera, competitor in this endeavor was the leading CDMA phone supplier in Japan, is now positioned to be a major Swedish-based Ericsson, the leader supplier in North America and other markets. in developing systems based on the We are very proud of the accomplishments of our Consumer Products competing GSM technology that has Division. A major 1999 U.S. customer satisfaction and loyalty survey deter- long dominated European markets. mined that our products rated higher than Motorola, Nokia and Samsung. In We resolved our patent litigation just four years, we gained substantial market share and manufactured more with Ericsson this year and signed than 14 million CDMA digital wireless phones by the end of fiscal 1999. important agreements that pave the way for making CDMA the worldwide standard. Under the agreements, QUALCOMM and Ericsson are jointly supporting a single CDMA world 07
  12. 12. Our CDMA technology got its start QWBS had its most profitable year ever in fiscal 1999, shipping more than in the world through our strong 48,000 OmniTRACS systems and passing the 300,000 mark for units sold leadership in the wireless market. worldwide. There were major new contracts in Brazil, Argentina and the Now we are taking our Company U.S. In fact, we gained 200 new customers and 90 current customers to the next level by once again renewed their commitments. Shortly after the end of the fiscal year, the focusing on our core competen- People’s Republic of China agreed to allow us to bring our OmniTRACS cies in CDMA technology. system to their country. We have commercialized wireless QUALCOMM is a founding member of the Globalstar consortium, a constellation voice technology and continue to of Low-Earth Orbiting (LEO) satellites that enables wireless communications supply the semiconductor chips from virtually anywhere on the globe. The newly renamed QUALCOMM that drive the worldwide growth Wireless Systems Division (QWS) provides contract services to Globalstar of those markets. Now we have by building and maintaining terrestrial ground stations (gateways) for the some big ideas for using our CDMA system. QWS has now shipped 38 gateways around the world. We are proud expertise to enable other wireless to report that after a decade of research and development activities, the communications applications to first phase in the commercial launch of the service took place in the grow and evolve. closing months of 1999. Enabling Technologies QWS also designs and manufactures satellite phone solutions for Globalstar. After more than a million test calls on our handheld and fixed Globalstar Our first commercial venture, the phones, we were awarded approvals by the leading regulatory authorities OmniTRACS system, has now stream- in four continents, which paves the way for unrestricted use of our phones lined operations for many of the across all international borders. major trucking firms in the U.S., and contributed significantly to highway This service is designed to enable people in remote and underserved safety along the way. The system locations in more than 100 countries to become connected to the world- enables transportation companies wide global communications network. to manage fleet information, track QUALCOMM develops enabling technologies for people with big ideas and truck locations and provide personal the potential social and economic benefits are evidenced daily in the mar- communications services to their ketplace. For example, our digital compression and network management drivers. The division was renamed technologies may enable movie viewers to have a flawless film-going QUALCOMM Wireless Business experience in the future. Our Digital Media Division (QDM) is contributing Solutions (QWBS) this year to reflect to a movie industry effort to develop a practical “all-digital” cinema. This its evolving mission. As part of the promising new format was demonstrated this year when special test division’s commitment to develop screenings were conducted. As a developer for the “Condor Project,” the new products and serve expanded QDM Division is also enabling government clients to have secure wireless markets, QWBS entered into exciting phones with encryption and a net broadcasting capability that incorporates development deals with Symbol end-to-end encryption. Technologies, ORBCOMM and others. 08
  13. 13. S&P F OR T U N E 00 This was a year of major We are extremely proud to milestones for QUALCOMM. have entered the Standard & Our Company was named Poor’s 500 Stock Index and to to the prestigious FORTUNE have been named the top per- 500 list, which highlights forming stock on the S&P 500 the largest companies in 1999. in America.
  14. 14. RECORD REVENUES FOR ONE QUARTER… $1, 000, 000,000. 10 This was a year of big rev- enues for our Company. In the third quarter of fiscal 1999, for the first time, QUALCOMM earned more than a billion dollars in revenues.
  15. 15. Eudora, our popular and award- This year, our fifth generation chip for handsets (the MSM3000™) and winning e-mail software, continues its associated system software enabled digital phone manufacturers to to evolve. At year-end we announced quickly build into their phones the most sophisticated voice recognition a major free upgrade for the program capability available today. It allows for very long standby times of approxi- and reconfigured our marketing mately 200 hours and can be packaged in extremely small phones. The strategy. One core version of the division shipped millions of these chips, which also support data speeds of program is now available in three up to 86 kilobits per second (kbps). This is the only chip solution in the user-selected modes, including a industry that enables data to be transferred faster than traditional wired feature-packed “free” version made modems used by most personal computers. The sixth generation MSM3100 possible through advertising spon- began shipping in the fourth quarter this year, enabling 300 hours standby sorship. The new upgrade will be time and 50% smaller package size. offered to over 16 million people Leading The Way worldwide who now subscribe to Eudora Light. Growing interest in computing and the Internet has fueled public demand for faster communications technologies. To support market needs and As we contemplate the power solidify our leadership in this field, QUALCOMM has developed High Data of big ideas and the value created Rate (HDR) technology. We think that technologies such as HDR today through enabling technologies, we (and 3G in the future) may be as revolutionary to the wireless Internet as inevitably come back to another CDMA technology has been to wireless voice communications. division that went through a name change this year. QUALCOMM‘s Today’s wireless communications networks (designated IS-95A) are capable CDMA Technologies Division (QCT) of transmitting data at approximately 14.4 kbps. The next generation in makes the chips that carry our vision network technology—IS-95B—supports 64 to 115 kbps. South Korea launched forward. The division has an impres- the first commercial IS-95B network in 1999, and Japan followed suit sive track record of on-time delivery in early 2000. To remain competitive, service providers in other markets, of six generations of CDMA chipsets including the U.S., are making plans to offer wireless data applications. and software solutions. QUALCOMM will strive to be there every step of the way with the technology and support to spark the transition. Our chip business has an excellent reputation for giving manufacturers HDR has potential for both preceding and complementing 3G, the next the functionality, features and inte- evolutionary step in the wireless communications technology timeline. gration they need to build innovative QUALCOMM is in a unique position to enable growth and development in and cost-effective CDMA products, the voice and data arenas of the wireless communications industry. We and we do that consistently with believe we have the IPR and the people to continue to be a leader through the fastest possible time-to-market. the next technology revolution. 11
  16. 16. Creating Value After being named to the S&P 500, we anticipated increased demand from the index funds. We sold 6.9 million shares to these funds and gained net We believe the Company performed proceeds of over $1 billion to fund our future growth. Our total market capi- exceptionally well this year and that talization reached a milestone this fiscal year as QUALCOMM became a fact was reflected not only in market $109 billion company by the end of calendar 1999. Our ideas have clearly acceptance of our technology but led to results. in increased revenues, profits and stock value. Our Company gained additional capital this year through very strong revenues across business units. Revenues grew to $3.9 billion, up 18% from last year. QUALCOMM’s stock price growth License, royalty and development fees for fiscal 1999 were $343 million, led our Board of Directors to effect compared to $218 million last year. Earnings before taxes this year increased a two-for-one stock split in May 1999 by 106% to $307 million compared to $149 million last year. and a four-for-one stock split in December 1999. The outlook for fiscal 2000 and beyond is very positive as worldwide CDMA continues to grow, and our Company is well positioned to succeed in We continued to reduce overall tomorrow’s wireless communications markets. We are very pleased with expenses as a percentage of rev- the demand for our products and services and want to conclude by thanking enues and substantially improved all the outstanding employees who are making QUALCOMM an exceptional our margins this year. CIO Magazine performer and the leader in our industry. Through ethical and intelligent acknowledged our operational and pursuit of excellence, all of us at QUALCOMM are pursuing big ideas to bring strategic excellence by naming meaningful benefits to people around the world. QUALCOMM a recipient of the 1999 CIO-100 award for companies pos- sessing the strategy to prosper into the next century. DR. IRWIN MARK JACOBS RICHARD SULPIZIO Chairman and President and Chief Executive Officer Chief Operating Officer 12
  18. 18. the journey of a thousand miles begins with a single chip 14
  19. 19. Enabling manufacturers… Our chipsets and software solutions have been sold to CDMA manufacturers world- wide and can be found on six continents. > Inspiring CDMA manufacturers to make smaller, smarter phones with unprecedented capabilities. 15
  20. 20. the phone is greater than the sum of its parts > Giving people power and control with technology that matters and makes life easier. 16
  21. 21. Enriching lives… We help people lead more mobile, productive lives with CDMA digital wire- less phones that provide a variety of time-saving features and crystal clear voice clarity. 17
  22. 22. no one is an island with CDMA > Bringing people together by fueling the most advanced wireless networks and offering wireless solutions for business. 18
  23. 23. Linking people… We develop the semiconductor chipsets and system software that help drive the worldwide growth of CDMA digital networks. 19
  24. 24. what a wireless web we weave > Breaking the speed barrier with high data rate capabilities allowing for very fast wireless Internet access. 20
  25. 25. Delivering services… Our innovative satellite technology delivers powerful tracking and information services to the transportation industry. And the ground stations and satellite phones we build for the Globalstar network are enabling communica- tions from virtually anywhere in the world. 21
  26. 26. I N N O VAT I O N I S T H E H E A R T O F O U R C O M PA N Y These timelines represent a roadmap, tracing the evolution of technology that put our Company on the map and changing the way people communicate. It’s a complex story, but here’s what it really means. About a decade ago, QUALCOMM engineers pio- neered the development of a revolutionary digital wireless communications technology called CDMA for commercial use. Compared to traditional analog systems, CDMA dramatically increases system capacity for network operators and enables superior voice quality, greater coverage and extended talk times for end users. CDMA phones also offer a wide range of features such as caller ID, hands-free calling and Internet data access. Today, CDMA has gained global acceptance and is the fastest-growing digital wireless communications technology in history. 22
  27. 27. C D M A Te c h n o l o g y • Commercial CDMA • Landmark agreements • Regulatory body accepts • Sprint PCS selects • Full-scale CDMA • QUALCOMM proposes a service launches pave the way for U.S. PCS standard CDMA technology R&D underway superior wireless telecom in South Korea QUALCOMM’s CDMA for nationwide solution called CDMA • 1st commercial CDMA to become the world network • PCS PrimeCo system deployed in standard for the next activates national Hong Kong generation of wireless PCS service in U.S. telecom (called 3G) • High volume • Over 41 million cdmaOne shipments of CDMA subscribers worldwide chipsets begin • Field trials and • International telecom demonstrations regulatory body accepts 1st CDMA standard (called IS-95) • South Korea selects CDMA 89 90 91 92 93 94 95 96 97 98 99 CSM Infrastructure Chipsets CSM 1.0 offers an integrated CSM 1.5 developed CSM2000 developed CSM5000 1st CSM solution requires multiple chips solution (all-in-one chipset) • Smaller, cheaper and • Works with • 3G CDMA 1x MC • CSM modulation chip • Works with IS-95A and uses less power IS-95A & IS-95B (world wireless standard • CSM demod chip IS-95B networks networks of the future) • One channel • Viterbi decoder chip • Faster data rates per chip • CSM 1.5 compatible • Faster data rates (up to 14.4 kbps) (up to 307.2 kbps) • Faster data rates • One channel per chip (up to 115.2 kbps) • 30+ channels per chip • 8 channels per chip 89 90 91 92 93 94 95 96 97 98 99 MSM Phone Chipsets 3rd gen MSM 5th gen MSM (MSM3000) 6th gen MSM (MSM3100) MSM5000 1st gen MSM (MSM2) • Chipset developed • Chipset developed • Compliant with • R&D begins • Chipset developed IMT-2000 1X MC • Up to 200 hours standby time • 50% smaller • Used in QCP800 phone • Up to 300 hours standby time • IS-95A and IS-95B • Faster data rates (up to 86 kbps) compatible • IS-95A/IS-95B compliant • Mixed signal integration • 2X voice capacity • Supports USB data interface • Faster data rates (up to 153.6 kbps) 2nd gen MSM iMSM family 4th gen MSM (MSM1) •Supports HDR technol- (MSM2300) • Chipset developed ogy (up to 2.4 Mbps) • Highly cost-effective • Advanced architec- chipset developed ture supports Internet services • Features dual processors, embedded memory and more • Supports 3rd party Op Systems/Apps 89 90 91 92 93 94 95 96 97 98 99 23 KEY CDMA: QUALCOMM’s pioneering Code Division Multiple Mbps: Megabits per second. Another measure of wire- Access wireless telecommunications technology. less transmission speed. CSM: Cell Site Modem. A chipset and system software MSM: Mobile Station Modem. A chipset and system solution used in CDMA wireless network software solution used in CDMA wireless infrastructure equipment. handsets. Gen: Generation. PCS: Personal Communications Services. Mobile wire- less telecommunications systems that operate at HDR: High Data Rate technology. 1800-1900 MHz frequencies. kbps: Kilobits per second. A measure of wireless trans- R&D: Research and Development ii d
  28. 28. Licensing Our Technology… D I G I TA L W I R E L E S S NETWORKS INFRASTRUCTURE TEST EQUIPMENT Fujitsu Limited Advantest Corporation QUALCOMM’s CDMA technology is Hitachi, Ltd. ANDO Electric Co., Ltd. the engine for the networks that Hughes Network Systems, Inc. Anritsu Corporation deliver the world’s most sophisti- Hyundai Electronics Industries Co., Ltd. Comarco Wireless Technologies, Inc. cated digital wireless technology. LG Information & Communications, Ltd. Grayson Electronics Company Commercial cdmaOne™ networks Lucent Technologies Inc. Hewlett-Packard Company around the world served over 41 Motorola, Inc. IFR Systems, Inc. million subscribers by September NEC Corporation Japan Radio Co., Ltd. of 1999, and the number is growing. Nortel Networks Corporation LCC Corporation Samsung Electronics Co. Motorola, Inc. Telefonaktiebolaget LM Ericsson Racal Instruments Ltd. Rhode & Schwartz GmbH & Co. Safco Corporation Sage Instruments Tektronix, Inc. Telefonaktiebolaget LM Ericsson Wavetek GmbH CABLE AND MISCELLANEOUS Willtech Incorporated EQUIPMENT Ortel Corporation Transcept License, royalty and development fees generated $343 million during the 1999 fiscal year. 24
  29. 29. CDMA TELEPHONES SUBSCRIBER EQUIPMENT QUALCOMM’s CDMA chipsets and NEC Corporation system software solutions are used Acer Peripherals, Inc. NIPPONDENSO Co., Ltd. (DENSO) by manufacturers to build smaller, Alps Electric Co./Alpine Electronics Inc. Nokia Mobile Phones Ltd. faster, smarter phones. Our Appeal Telecom Co., Ltd. Oki Electric Industry Co., Ltd. MSM3000™ single-chip Mobile Casio Computer Co., Ltd. Pantech Co., Ltd. Station Modem (MSM™) baseband Fujitsu Limited Philips Electronics N.V. processing solution offers many GTRAN Incorporated Samsung Electronics Co. new features, including longer Haitai Electronics Co., Ltd. Sanyo Electric Co., Ltd. standby times and higher data rates. Hanwha Corporation Sewon Co., Ltd. Higher data rates enable wireless Hitachi, Ltd. Sharp Corporation phone users to access a new breed Hughes Network Systems, Inc. Siemens Rolm Communications Inc. of Internet applications with fast Hyundai Electronics Industries Co., Ltd. Sierra Wireless, Inc. packet switched access to data- Kenwood Corporation SK Telecom Co., Ltd. bases, e-mail and web browsing. Kokusai Electric Company Sony Corporation Kyocera Corporation Standard Telecom Co., Ltd. LG Information & Communications, Ltd. Synertek, Inc. LG Electronics Inc. Telefonaktiebolaget LM Ericsson Lucent Technologies Inc. Telson Electronics Co., Ltd. Matsushita Communication Industrial Co. Toshiba Corporation Maxon Electronics Co., Ltd. Uniden Corporation Mitsubishi Electric Corporation United Computer & Telecommunication, Inc. Motorola, Inc. Wide Telecom Co., Ltd. SUBSCRIBER EQUIPMENT (GLOBALSTAR) ASICS Ericsson OMC DSPC, a subsidiary of Intel Telital S.r.l LSI Logic Corporation PrairieComm Incorporated 25
  30. 30. BUSINESS DEVELOPMENT… MARKET DRIVERS DATA RATE EVOLUTION Speed and bandwidth are key to giving people the data and Internet applications they want. QUALCOMM’s HDR– High Data Rate (HDR) technology Full Internet and the next generation of digital experience wireless technology, called “3G,” Fast enough for large are expected to break that speed downloads barrier wide open. QUALCOMM engi- and multi- neers are preparing the chipsets media and software that can launch the Close to new standard. But being innovative office LAN means being there first. We’re experience, First useful commercializing a wireless data almost full speed for Makes the web network solution right now to offer 3G graphics experience transparency benefits sooner. HDR is a versatile easy and fun, even full web high-capacity, high-speed wireless pages, some telecommunications technology downloads Rare Internet that can change the way people use, only in will access the Internet. HDR works text modes on existing 1.25 MHz channel net- works and optimizes data packets at speeds up to 2.4 Mbps. It can overlay existing wireless networks or work as a stand-alone system. 9.6 kbps 28.8 kbps 56 kbps 128 kbps 384 kbps 2 + Mbps It works on fixed, portable, and mobile applications. And it’s another example of QUALCOMM’s innovative thinking. We’re meeting the high speed challenge head on… and we’re not waiting for the next generation to do it. HDR is to wireless Internet access as CDMA is to wireless voice service. 26
  31. 31. THE ROAD TO THE FUTURE… CONTINUING TECHNOLOGY CDMA TECHNOLOGY ROADMAP The world’s most advanced digital wireless technology, QUALCOMM’s CDMA, meets the radio air interface needs for the next generation of IS-95A IS-95B 3G MC 1X 3G Multi- Carrier 3X • 14.4 kbps data • Up to 115.2 kbps data • Up to 384 kbps data wireless communications, called • Overlay AMPS • Advanced soft handoff • Double voice capacity • Voice and data IMT-2000 CDMA. This flexible stan- • Voice quality • Access handoff • Double standby time • Up to 2 Mbps data dard functions in three modes— • Spectral efficiency • Mobile-assisted • Capacity inter-frequency Multi-Carrier, Direct Spread, and hard handoff Time Division Duplex—and oper- ates with ANSI-41 and GSM MAP networks. CDMA will have the 3G Direct whole world covered. And with Spread CDMA chosen as a next generation • Voice and data • Up to 2 Mbps data standard for the industry, carriers across the globe will have clear migration paths for transitioning their networks. Manufacturers HDR (Data-only) working on next generation prod- • Data-only: dedicated and optimized ucts gain cost advantages and 1.25 MHz channel • Up to 2.4 Mbps peak rate faster time-to-market. Users will • Up to 7 Mbps average per cell truly have untethered commu- nications at high transmission speeds. Whether you’re a network operator, a manufacturer or an end 95 96 97 98 99 00 01 02 03 user, CDMA 3G is the promise of the future. CDMA is the technology for the next generation. 27
  32. 32. Y E A R AT A G L A N C E : A S U M M A R Y O F N E W S R E L E A S E S Network Optimization 10.08.98 11.17.98 A new network optimization tool for Eudora E-mail by Phone Service $35M Handset Agreement in Brazil field test engineers, The Retriever The newest release of QUALCOMM’s The largest telecom company in pilot scanner/test phone provides popular e-mail software allows Brazil agrees to purchase QUALCOMM technicians with portable, wireless e-mail access by phone thanks to CDMA digital handsets. The Company, over-the-air testing of network and text-to-speech technology that con- TELESP, serves 30 million people. handset performance over CDMA verts e-mail into digitized speech. digital cellular and PCS networks. 11.18.98 10.26.98 12.10.98 QUALCOMM: One Of The Fast 500 OmniTRACS Division Renamed Deloitte & Touche names QUALCOMM Ericsson Supports Convergence The OmniTRACS Division changes to its “Fast 500 ” list for the second Ericsson publicly supports the its name to QUALCOMM Wireless consecutive year. The 500 fastest convergence of cdma2000™ and Business Solutions (QWBS). growing technology companies in W-CDMA, the proposals based on the U.S. are based on a five-year CDMA for 3G digital wireless tech- OmniTRACS Contract Extended percentage growth in revenues. nology. QUALCOMM invites them to Prime, one of the top ten U.S. trucking QUALCOMM revenues grew at a join in the discussions. firms, signs on for five more years compound annual rate of 88% from of service. 1993-97. 01.11.99 11.03.98 Best Companies List 11.25.98 FORTUNE magazine names QUALCOMM Record Earnings & Revenues Q Phone Award to its list of “100 Best Companies to • 4th quarter fiscal 1998 revenues: PC Computing magazine awards Work for in America.” $926M (up 54% over Q4 FY97) Q phone the 1998 Most Valuable • 4th quarter net income: $40M Product award in the Digital Office 01.19.99 or $.27 per share (diluted) Business Tools division for Best (up 33% and 29% over Q4 FY97, First Quarter Results Cell Phone. respectively) QUALCOMM reports the highest quar- terly revenues in its 13-year history. • FY98 revenues: $3.3B (up 60% 12.08.98 • 1st quarter fiscal 1999 revenues: over FY97) Truck Fleet Selects OmniTRACS $941M (up 20% over Q1 FY98) • FY98 EPS: $.73 per share (diluted) Omaha-based Cornhusker Motor • 1st quarter net income: $49M (up 15% over FY97) Lines signs a contract to outfit their (up 32% over Q1 FY98) • Excluding non-recurring charges, entire fleet with OmniTRACS. • 1st quarter EPS: $.33 per share FY98 EPS: $.94 per share (diluted) WLL Network In Africa (diluted) compared with $.25 Mauritius Telecom contracts for a per share (diluted) in Q1 FY98 11.10.98 cdmaOne (IS-95) WLL network that Joint Venture With Microsoft adds 50,000 subscribers to its digital QUALCOMM and Microsoft form a wireline network. Mauritius has the new joint venture company named highest phone penetration in Africa. Wireless Knowledge LLC. The JV was formed to enable carriers to offer mobile customers wireless access to data and applications over their choice of wireless net- works and enterprise systems. 28
  33. 33. 01.25.99 02.08.99 03.25.99 15,000 Truckers Get CabCARD® New “Thin Phone” CDMA Agreement With Ericsson The QUALCOMM Thin Phone (the 4th The nation’s largest trucking firm, Ericsson and QUALCOMM agree to generation of CDMA digital wireless Schneider, contracts for CabCARD jointly support a single CDMA world phones) features an ultra-thin design e-mail and pre-paid phone services. standard with three optional modes and weighs only four ounces. for the next generation of wireless 6th Generation Chips communications, to enter into The 6th generation MSM3100™ 01.26.99 royalty-bearing cross licenses for chipset and system software solu- their respective patent portfolios Cheaper E-mail For Truckers tion features a 50 percent reduction and to settle the existing litigation QUALCOMM reduces prices dramati- in chip size and up to 300 hours of between the companies. As part of cally on CabCARD,® providing e-mail standby time. The first baseband the agreement, Ericsson purchased savings to over 85,000 truck drivers. modem to offer on-chip hardware our terrestrial CDMA wireless infra- support for in-phone GPS-based structure business, including its R&D 01.27.99 CDMA position and location ser- resources, located in San Diego, vices, it enables manufacturers to 30 Million MSMs California and Boulder, Colorado. meet the FCC mandate for emer- Mobile Station Modem chip ship- gency location tracking (E911). ments pass the 30 million mark. 04.09.99 Advanced Voice Recognition 5th Generation Chips FORTUNE 500 List An add-on option for the Production shipping begins for the FORTUNE magazine names QUALCOMM MSM3000/3100 system software, 5th generation CDMA chipset and to its 1999 FORTUNE 500 ® list, which PureVoice VR™ voice recognition system software. Twenty-one leading highlights the largest companies software allows manufacturers to CDMA handset manufacturers agree in America. quickly add powerful speech capa- to purchase the MSM3000 chipset bilities to CDMA handsets without and system software. 04.14.99 additional hardware. Stock Split 02.01.99 03.15.99 The Board declares a 2-for-1 stock New Chip Packaging split of the Company’s Common $14M Mobile Development New packaging debuts for the Stock distributed (on May 10) to Agreement MSM3000 and IFT3000™ and stockholders of record on April 21. QUALCOMM and Symbol Tech- IFR3000™ fully integrated Inter- nologies, Inc. will develop mobile mediate Frequency (IF) chipsets. 04.19.99 vehicle computer and integrated Manufacturers can design smaller technology solutions for the trans- Japan’s First CDMA Network handsets with longer stand-by times portation industry. QUALCOMM’s 5th generation MSM3000 and higher data-rate services. It is chipsets are featured in the phones the first single-chip baseband solu- 03.17.99 developed by three Japanese manu- tion to enable data speeds up to 86.4 facturers for the country’s first kbps. Handheld wireless devices 10 Millionth Phone Shipped nationwide cdmaOne network. using the chipset will be faster than QUALCOMM Personal Electronics personal computers equipped with (QPE), a joint venture between standard modems. subsidiaries of QUALCOMM and Sony Electronics Inc., ships its ten millionth CDMA phone. 29
  34. 34. Y E A R AT A G L A N C E : A S U M M A R Y O F N E W S R E L E A S E S 04.20.99 05.19.99 06.11.99 Second Quarter Earnings High-Speed Packet Data To Asia Chairman Honor • 2nd quarter fiscal 1999 revenues: QUALCOMM’s innovative new The Smithsonian recognizes $932M (up 23% over Q2 FY98) software solution facilitates High- QUALCOMM Chairman and CEO Dr. Speed Packet Data (HSPD) service in Irwin Mark Jacobs for his achieve- • 2nd quarter net loss: $43M Japan and Korea. It is the industry’s ments in the application of information (down 264% from Q2 FY98) only technology solution delivering technology to the benefit of society. • 2nd quarter EPS: $.29 per share 86.4 kbps data. A record of his life and career is loss compared with $.18 per included in the Smithsonian’s share (diluted) in Q2 FY98 05.21.99 National Museum of American Excluding Non-Recurring Charges: History. Thin Phone In Canada • 2nd quarter net income: $65M Canada’s Clearnet Communications (up 250% over Q2 FY98) 06.14.99 chooses QUALCOMM’s new Thin • 2nd quarter EPS: $.41 per share Phone for its pre-paid PCS offering. Subscriber Equipment License (diluted) (up 23% over Q2 FY98) QUALCOMM grants Sierra Wireless a 05.24.99 royalty-bearing license for cdmaOne 04.28.99 and cdma2000 wireless applications, 3G Chipsets including cellular, PCS and wireless Better Trailer Tracking Solutions QUALCOMM announces the first local loop. QUALCOMM and ORBCOMM will offer 3G CDMA chipset and system soft- a comprehensive satellite-based ware solution, the MSM5000™ and 06.15.99 trailer tracking system. CSM5000™ A single chip will handle . 32 simultaneous calls. Initial data Wireless Business Solution 05.06.99 rates of 153 kbps (increasing to 724 Solutions, Inc. chooses the 2 Mbps) will facilitate Internet-ready pdQ smartphone as one of the key More CabCARD Truck Fleets consumer products over IS-95A/B platforms for its new wireless Ohio-based Roberts Express plans and cdma2000 networks. financial services solution in market to offer CabCARD services to all of trial by the Bank of Montreal and its independent contractors. Infrastructure Sale Completed, Bell Mobility. The system enables Patent Disputes Settled financial institutions to deliver per- 05.11.99 The sale of QUALCOMM’s terrestrial sonalized banking, brokerage and CDMA wireless infrastructure busi- $120M Phone Deal With US WEST information content on a variety of ness to Ericsson closes. Patent US WEST agrees to purchase CDMA Internet access devices. litigation is settled. digital PCS phones, including the new pdQ smartphone™ and Thin 07.12.99 06.02.99 Phone, for its CDMA network in 14 S&P 500 Western and Midwestern states. OmniTRACS In Tennessee QUALCOMM is added to the S&P Customers will have advanced Nashville-based Star Transportation 500 Index. CDMA digital services, including replaces its communication system wireless Internet access. with QUALCOMM’s OmniTRACS. It 07.15.99 orders 430 OmniTRACS units. Lucent Emergency Caller Project QUALCOMM and Lucent will jointly develop technology that locates wireless phone users in distress. 30
  35. 35. Voice Recognition Contracts 07.19.99 08.18.99 LG Information and Communications Third Quarter Earnings 1999 CIO-100 Award and Acer Peripherals select PureVoice • 3rd quarter fiscal 1999 revenues: CIO Magazine recognizes VR for their CDMA wireless handsets. $1B (up 15% over Q3 FY98) QUALCOMM for operational and • 3rd quarter net income: $59M strategic excellence. 09.22.99 (up 909% over Q3 FY98) Next Generation CDMA Chipsets • 3rd quarter EPS: $ 35 per share 08.24.99 QUALCOMM ships samples of the 6th (diluted) compared to $.04 per South American Mobile Deal generation MSM3100 CDMA chipset share (diluted) in Q3 FY98 QUALCOMM and AUTOTRAC Comércio and system software that supports Excluding Non-Recurring Charges: e Telecomunicacões S.A. of Brazil data rates up to 86.4 kbps. • 3rd quarter net income: $135M will bring OmniTRACS to Argentina. pdQ smartphone to Israel (up 445% over Q3 FY98) Israel’s Pele-phone Communications • 3rd quarter EPS: $.75 per share 08.25.99 buys QUALCOMM’s pdQ smartphones (diluted) 100 Fastest-Growing Companies for its national network. FORTUNE magazine names QUALCOMM 07.20.99 New Mobile Station Modem Family to the list of the 100 Fastest-Growing The iMSM product family promises More Powerful Voice Recognition Companies in America. Eligible expanded data capabilities and very PureVoice VR 2.1 software enables companies have a 30% annual advanced wireless Internet services. manufacturers to add powerful revenue and EPS growth rate. speech capabilities to their CDMA World’s Smallest Satellite Phone handsets in English, Japanese 09.14.99 QUALCOMM’s tri-mode portable phone and Korean. provides access to the Globalstar Phone Business Transition network, an advanced combination $400M Phone Deal With Sprint QUALCOMM announces that the of satellite and wireline technology, Sprint PCS purchases QUALCOMM’s terrestrial phone business may and also accesses cellular networks. new Internet-capable Thin Phone be transitioned. and pdQ smartphone for its national New pdQ smartphone Application pdQ suite Applications network. WaveWare Communications chooses The pdQ suite package offers the pdQ smartphone for its WaveSync Enhanced Audio Palm Pilot users applications server, allowing Palm Computing PureVoice Audio AGC software for that support e-mail control and users to synchronize multiple the MSM3000 and MSM3100 enables wireless Internet browsing. applications. superior sounding handsets without additional hardware. 09.16.99 09.23.99 CRST Buys 1,150 OmniTRACS 07.21.99 Lucent and QUALCOMM 3G Alliance Iowa-based CRST replaces its QUALCOMM will provide CSM5000 Common Stock Offering mobile communication system infrastructure chips and software for QUALCOMM places 6.9 million shares with QUALCOMM’s OmniTRACS. Lucent’s CDMA base station equip- of common stock in a public offering ment. Technology being developed at $156.50 per share. Net proceeds 09. 21.99 by the two CDMA leaders is called are $1.079 billion. MSM3000 Paves Way To Future cdma2000 1X RTT, and is the first 29 manufacturers are now designing phase of the industry approved 08.02.99 products based on QUALCOMM’s IS-2000 3G standard. High-Speed Data In Korea MSM3000. QUALCOMM will join high-speed data trials on KT Freetel’s advanced CDMA network, the world’s first IS-95B network. 31
  36. 36. 32