Quarterly report pursuant to Section 13 or 15(d)

Segment Information

 v2.3.0.11
Segment Information
 9 Months Ended
Jun. 26, 2011
Notes to Financial Statements [Abstract]  
Note 9 - Segment Information
Note 9 — Segment Information
The Company is organized on the basis of products and services. The Company aggregates four of its divisions into the Qualcomm Wireless & Internet segment. Reportable segments are as follows:
•
Qualcomm CDMA Technologies (QCT) — develops and supplies integrated circuits and system software based on CDMA, OFDMA and other technologies for voice and data communications, networking, application processing, multimedia and global positioning system products.
•
Qualcomm Technology Licensing (QTL) — grants licenses or otherwise provides rights to use portions of the Company’s intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE and/or OFDMA standards, and collects license fees and royalties in partial consideration for such licenses;
•
Qualcomm Wireless & Internet (QWI) — comprised of:
•
Qualcomm Internet Services (QIS) — provides content enablement services for the wireless industry and push-to-talk and other products and services for wireless network operators;
•
Qualcomm Government Technologies (QGOV) — provides development, hardware and analytical expertise to United States government agencies involving wireless communications technologies;
•
Qualcomm Enterprise Services (QES) — provides satellite- and terrestrial-based two-way wireless information and position reporting services to transportation and logistics companies and other enterprise companies with fleet vehicles; and
•
Firethorn — builds and manages software applications that enable certain mobile commerce services.
•
Qualcomm Strategic Initiatives (QSI) — makes strategic investments that the Company believes will open new opportunities for CDMA and OFDMA technologies, support the design and introduction of new CDMA and OFDMA products or possess unique capabilities or technology. Many of these strategic investments are in early-stage companies and in wireless spectrum, such as the BWA spectrum won in the auction in India. QSI also includes FLO TV Incorporated (FLO TV), the Company’s wholly-owned wireless multimedia operator subsidiary. Since the shut down of the FLO TV business and network on March 27, 2011, the Company has been working to sell its remaining assets and exit contracts. The 700 MHz spectrum was classified as held for sale, and all other FLO TV assets were considered disposed of, at June 26, 2011. Accordingly, the results of operations related to the FLO TV business were presented as discontinued operations at June 26, 2011 (Note 10). Share-based payments that had been included in reconciling items and QSI revenues and earnings (loss) from continuing operations before income taxes (EBT) have been adjusted to conform for all prior periods presented.
The Company evaluates the performance of its segments based on EBT from continuing operations. Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets. Certain income and charges are not allocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. Unallocated income and charges include certain investment income (loss); certain share-based compensation; and certain research and development expenses and other selling and marketing expenses that were deemed to be not directly related to the businesses of the segments. Additionally, starting with acquisitions in the third quarter of fiscal 2011, unallocated charges include recognition of the step-up of inventories to fair value and amortization of certain intangible assets. Such charges related to acquisitions that were completed prior to the third quarter of fiscal 2011 are allocated to the respective segments. The table below presents revenues and EBT for reportable segments (in millions):
 
QCT
 
QTL
 
QWI
 
QSI*
 
Reconciling
Items*
 
Total*
For the three months ended:
 
 
 
 
 
 
 
 
 
 
 
June 26, 2011
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,194

 
$
1,257

 
$
164

 
$
—

 
$
8

 
$
3,623

EBT
430

 
1,092

 
(13
)
 
(30
)
 
(205
)
 
1,274

June 27, 2010
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,691

 
$
847

 
$
162

 
$
—

 
$
—

 
$
2,700

EBT
404

 
673

 
6

 
60

 
(67
)
 
1,076

 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended:
 
 
 
 
 
 
 
 
 
 
 
June 26, 2011
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
6,272

 
$
4,061

 
$
493

 
$
—

 
$
14

 
$
10,840

EBT
1,487

 
3,559

 
(147
)
 
(97
)
 
(439
)
 
4,363

June 27, 2010
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
4,835

 
$
2,738

 
$
456

 
$
—

 
$
1

 
$
8,030

EBT
1,173

 
2,266

 
14

 
38

 
(169
)
 
3,322


*As adjusted for discontinued operations (Note 10)
Reconciling items in the previous table were as follows (in millions):
 
Three Months Ended
 
Nine Months Ended
 
June 26,
2011
 
June 27, 2010*
 
June 26,
2011
 
June 27, 2010*
Revenues
 
 
 
 
 
 
 
Elimination of intersegment revenues
$
(1
)
 
$
(1
)
 
$
(3
)
 
$
(7
)
Other nonreportable segments
9

 
1

 
17

 
8

 
$
8

 
$
—

 
$
14

 
$
1

EBT
 
 
 
 
 
 
 
Unallocated cost of equipment and services revenues
$
(73
)
 
$
(10
)
 
$
(103
)
 
$
(30
)
Unallocated research and development expenses
(129
)
 
(93
)
 
(400
)
 
(294
)
Unallocated selling, general and administrative expenses
(106
)
 
(72
)
 
(353
)
 
(211
)
Unallocated investment income, net
181

 
169

 
642

 
535

Other nonreportable segments
(78
)
 
(61
)
 
(225
)
 
(166
)
Intersegment eliminations
—

 
—

 
—

 
(3
)
 
$
(205
)
 
$
(67
)
 
$
(439
)
 
$
(169
)

*As adjusted for discontinued operations (Note 10)
Reconciling items for both the three months and nine months ended June 26, 2011 included $59 million and $18 million of unallocated cost of equipment and services revenues and unallocated selling, general and administrative expenses, respectively, related to the step-up of inventories to fair value and amortization of intangible assets resulting from the acquisition of Atheros (Note 12).
Revenues from external customers and intersegment revenues were as follows (in millions):
 
QCT
 
QTL
 
QWI
For the three months ended:
 
 
 
 
 
June 26, 2011
 
 
 
 
 
Revenues from external customers
$
2,193

 
$
1,257

 
$
164

Intersegment revenues
1

 
—

 
—

June 27, 2010
 
 
 
 
 
Revenues from external customers
$
1,691

 
$
847

 
$
162

Intersegment revenues
—

 
—

 
—

 
 
 
 
 
 
For the nine months ended:
 
 
 
 
 
June 26, 2011
 
 
 
 
 
Revenues from external customers
$
6,270

 
$
4,061

 
$
493

Intersegment revenues
2

 
—

 
—

June 27, 2010
 
 
 
 
 
Revenues from external customers
$
4,828

 
$
2,738

 
$
456

Intersegment revenues
7

 
—

 
—


Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QCT inventories at June 26, 2011 excluded $37 million related to the step-up of inventories to fair value resulting from the acquisition of Atheros (Note 12); such amount was included in reconciling items. QSI segment assets include certain marketable securities, notes receivable, spectrum licenses, other investments and all assets of QSI’s consolidated subsidiaries. QSI segment assets related to the discontinued FLO TV business totaled $926 million and $1.3 billion at June 26, 2011 and September 26, 2010, respectively. Reconciling items for total assets included $631 million and $384 million at June 26, 2011 and September 26, 2010, respectively, of goodwill and other assets related to the Company’s QMT division, a nonreportable segment developing display technology for mobile devices and other applications. Total segment assets also differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable securities, property, plant and equipment, deferred tax assets, goodwill, other intangible assets and assets of nonreportable segments. Segment assets and reconciling items were as follows (in millions):
 
June 26,
2011
 
September 26,
2010
QCT
$
1,345

 
$
1,085

QTL
32

 
28

QWI
154

 
129

QSI
2,531

 
2,745

Reconciling items
31,038

 
26,585

Total consolidated assets
$
35,100

 
$
30,572