QUALCOMM Announces Record Second Quarter Fiscal 2007 Results

Revenues $2.22 Billion, Diluted EPS $0.43

Pro Forma Revenues $2.22 Billion, Diluted EPS $0.50

Financial Guidance Increased for Fiscal 2007

SAN DIEGO, April 25 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM) today announced record results for the second quarter of fiscal 2007 ended April 1, 2007.

Total QUALCOMM (GAAP) Second Quarter Results

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

    *  Revenues:  $2.22 billion, up 21 percent year-over-year and 10 percent
       sequentially.

    *  Net income:  $726 million, up 22 percent year-over-year and 12 percent
       sequentially.

    *  Diluted earnings per share:  $0.43, up 26 percent year-over-year and
       13 percent sequentially.

    *  Effective tax rate:  22 percent for the quarter.  Fiscal 2007 estimated
       tax rate of approximately 21 percent.

    *  Estimated share-based compensation:  $84 million, net of tax, up
       8 percent year-over-year and down 3 percent sequentially.

    *  Operating cash flow:  $991 million, up 11 percent year-over-year;
       45 percent of revenues.

    *  Return of capital to stockholders:  $438 million, including
       $398 million, or $0.24 per share, of cash dividends paid (relating
       to dividends declared in the first and second quarters) and $40 million
       to repurchase 1.0 million shares of our common stock.

QUALCOMM Pro Forma Second Quarter Results

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

    *  Revenues:  $2.22 billion, up 21 percent year-over-year and 10 percent
       sequentially.

    *  Net income:  $838 million, up 19 percent year-over-year and 16 percent
       sequentially.

    *  Diluted earnings per share:  $0.50, up 22 percent year-over-year and
       16 percent sequentially; excludes $0.01 loss per share attributable
       to the QSI segment, $0.05 loss per share attributable to estimated
       share-based compensation and $0.01 loss per share attributable to
       acquired in-process R&D.

    *  Effective tax rate:  24 percent for the quarter and estimated for
       fiscal 2007.

    *  Free cash flow:  $1.09 billion, up 15 percent year-over-year;
       49 percent of revenues.  (Defined as net cash from operating
       activities less capital expenditures).

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

"We are pleased to report that the 3G CDMA-based market continues to grow at a rapid pace. Our results reflect strong year-over-year growth in CDMA2000(R) and WCDMA chipsets and handsets driving record revenue and earnings per share," said Dr. Paul E. Jacobs, chief executive officer of QUALCOMM. "Based on our current outlook, thanks primarily to stronger than expected chipset demand across our product portfolio and higher CDMA2000 handset shipments, we are raising our fiscal 2007 revenue and earnings per share guidance."

"Focused execution by QUALCOMM and its partners resulted in many exciting achievements this quarter. The MediaFLO(TM) USA service was commercially launched by Verizon Wireless and AT&T/Cingular announced their plan to launch services later this year. The GSM Association selected LG's phone, powered by a QUALCOMM chipset, as the '3G for All' winner to enable feature rich WCDMA handsets at lower prices. In addition, we announced the expansion of our single chip product line to include EV-DO Rev. A, providing a low cost mobile broadband solution. The innovation and competition enabled by our business model continues to provide manufacturers, operators and subscribers compelling devices, applications and services globally."

Cash and Marketable Securities

QUALCOMM's cash, cash equivalents and marketable securities totaled approximately $11.3 billion at the end of the second quarter of fiscal 2007, compared to $10.5 billion at the end of the first quarter of fiscal 2007 and $10.2 billion a year ago. During the second quarter of fiscal 2007, we announced a 17 percent increase in our quarterly dividend from $0.12 to $0.14 per share. A cash dividend of $0.14 per share is payable on June 29, 2007 to stockholders of record at the close of business on June 1, 2007.

Estimated Share-Based Compensation

Total QUALCOMM (GAAP) net income for the second quarter of fiscal 2007 included estimated share-based compensation, net of tax, of $84 million, or $0.05 per share, compared to $78 million, or $0.05 per share in the prior year quarter.



    Research and Development

                                    Estimated                         Total
                        QUALCOMM   Share-Based   In-Process          QUALCOMM
    ($ in millions)     Pro Forma  Compensation      R&D       QSI    (GAAP)

    Second quarter
     fiscal 2007           $370         $58          $10       $16     $454
    As a % of revenue        17%                                         20%
    Second quarter
     fiscal 2006           $302         $52          $21       $15     $390
    As a % of revenue        16%                                         21%
    Year-over-year
     change ($)              23%         12%         (52%)       7%      16%

Pro forma R&D expenses increased 23 percent year-over-year, primarily due to additional engineering resources for the development of integrated circuit products and other initiatives to support low-cost phones, multimedia applications, high-speed wireless Internet access and multi-mode, multi-band, multi-network products and technologies. QSI R&D expenses are primarily related to MediaFLO USA.



    Selling, General and Administrative

                                    Estimated                 Total
                        QUALCOMM   Share-Based               QUALCOMM
    ($ in millions)     Pro Forma  Compensation      QSI      (GAAP)

    Second quarter
     fiscal 2007           $301         $59          $25       $385
    As a % of revenue        14%                                17%
    Second quarter
     fiscal 2006           $188         $58          $17       $263
    As a % of revenue        10%                                14%
    Year-over-year
     change ($)              60%          2%          47%        46%

Pro forma selling, general and administrative (SG&A) expenses increased 60 percent year-over-year, largely attributable to increases in legal fees, employee related expenses and bad debt expense. The year-over-year increase in QSI SG&A expenses is primarily related to MediaFLO USA.

Effective Income Tax Rate

Our fiscal 2007 effective income tax rate is estimated to be 21 percent for total QUALCOMM (GAAP), consistent with our prior estimate. The second quarter tax rate of 22 percent for total QUALCOMM (GAAP) is higher than the estimated annual effective income tax rate due primarily to $33 million of tax benefits recorded in the first quarter of fiscal 2007 related to the retroactive extension of the federal research and development tax credit. Our fiscal 2007 QUALCOMM pro forma effective income tax rate is estimated to be 24 percent, compared to our previous estimate of 25 percent. This decrease in our pro forma estimated annual rate is primarily due to an increase in forecasted earnings taxed at less than the United States federal tax rate.

QUALCOMM Strategic Initiatives

The QSI segment includes our strategic investments, including our MediaFLO USA subsidiary, and related income and expenses. Total QUALCOMM (GAAP) results for the second quarter of fiscal 2007 include $0.01 loss per share for the QSI segment. The second quarter of fiscal 2007 QSI results included $50 million in operating expenses, primarily related to MediaFLO USA.

Business Outlook

The following statements are forward-looking and actual results may differ materially. Please see "Note Regarding Forward-Looking Statements" at the end of this news release for a description of certain risk factors and QUALCOMM's annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks. Due to their nature, certain income and expense items, such as realized investment gains or losses in QSI, gains and losses on certain derivative instruments or asset impairments, cannot be accurately forecast. Accordingly, the Company excludes forecasts of such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items. Estimated share-based compensation in future periods may vary materially from the business outlook as the methodology used to calculate this estimate is dependent on a variety of assumptions which are subject to market fluctuations and other factors.

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

Our third quarter and fiscal 2007 guidance includes the anticipated positive impact to QTL revenue resulting from an arbitration decision in April 2007 in our favor against Ericsson and Sony Ericsson for underpaying royalties to us under the terms of the license agreement with us. Under the arbitration order, we will receive $30 million for subscriber unit sales from 2004 through the first quarter of calendar 2006. In addition, royalty payments from the first quarter of calendar 2006 to the present, and going forward, will be made in accordance with the arbitrators' decision providing a positive impact on revenues and earnings.

We are engaged in multiple disputes with Nokia Corp. including litigation over Nokia's obligation to pay royalties for the use of certain of our patents. As a result, under generally accepted accounting principles, we do not expect to be able to record royalty revenue attributable to Nokia's sales starting in the fourth quarter of fiscal 2007 until an arbitrator (or court) awards damages or the disputes are otherwise resolved by agreement with Nokia. We had previously estimated the potential impact of non-payment of royalties from Nokia in the fourth quarter of fiscal 2007 for June quarter shipments to be approximately $0.04 to $0.06 diluted earnings per share. Our current estimate of royalties which we believe will be owed from Nokia in the fourth quarter of fiscal 2007 for June quarter shipments is approximately $0.04 to $0.05 diluted earnings per share, which we have excluded from our current fiscal 2007 guidance.




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

                           Business Outlook Summary

    THIRD FISCAL QUARTER
                                                           Current Guidance
                                                Q3'06           Q3'07
                                               Results        Estimates
    QUALCOMM Pro Forma
    Revenues                                    $1.95B         $2.2B - $2.3B
    Year-over-year change                                 increase 13% - 18%
    Diluted earnings per share (EPS)             $0.42         $0.50 - $0.52
    Year-over-year change                                 increase 19% - 24%

    Total QUALCOMM (GAAP)
    Revenues                                    $1.95B         $2.2B - $2.3B
    Year-over-year change                                 increase 13% - 18%
    Diluted earnings per share (EPS)             $0.37         $0.43 - $0.45
    Year-over-year change                                 increase 16% - 22%
    Diluted EPS attributable to QSI              $0.00               ($0.02)
    Diluted EPS attributable to estimated
     share-based compensation                   ($0.05)              ($0.05)

    Metrics
    MSM Shipments                          approx. 55M     approx. 62M - 65M
    CDMA/WCDMA handset units shipped       approx. 66M*    approx. 81M - 85M*
    CDMA/WCDMA handset unit wholesale
     average selling price                approx. $213*         approx. $213*
    *Shipments in Mar. quarter,
     reported in June quarter


    FISCAL YEAR
                                          Prior Guidance    Current Guidance
                             FY 2006          FY 2007            FY 2007
                             Results       Estimates(1)        Estimates(2)
    QUALCOMM Pro Forma
    Revenues                  $7.53B      $8.1B - $8.6B         $8.4B - $8.7B
    Year-over-year change             increase 8% - 14%    increase 12% - 16%
    Diluted earnings
     per share (EPS)           $1.64      $1.72 - $1.77         $1.84 - $1.88
    Year-over-year change              increase 5% - 8%    increase 12% - 15%

    Total QUALCOMM (GAAP)
    Revenues                  $7.53B      $8.1B - $8.6B         $8.4B - $8.7B
    Year-over-year change             increase 8% - 14%    increase 12% - 16%
    Diluted earnings
     per share (EPS)           $1.44      $1.44 - $1.49         $1.57 - $1.61
    Year-over-year change            even - increase 3%     increase 9% - 12%
    Diluted EPS
     attributable
     to in-process R&D        ($0.01)               n/a               ($0.01)
    Diluted EPS
     attributable
     to QSI                   ($0.02)            ($0.10)              ($0.09)
    Diluted EPS
     attributable
     to estimated
     share-based
     compensation             ($0.19)            ($0.20)              ($0.20)
    Diluted EPS
     attributable
     to tax items
     related to
     prior years               $0.02              $0.02                $0.02

    Metrics
    Fiscal year*
     CDMA/WCDMA
     handset unit
     wholesale
     average
     selling price      approx. $215       approx. $210         approx. $208
    *Shipments in Sept.
     to June quarters,
     reported in Dec.
     to Sept. quarters


    CALENDAR YEAR Handset Estimates
                                          Prior Guidance     Current Guidance
    CDMA/WCDMA handset                     Calendar 2007      Calendar 2007
     unit shipments     Calendar 2006        Estimates          Estimates
    March quarter        approx. 66M       not provided    approx. 81M - 85M
    June quarter         approx. 70M       not provided         not provided
    September quarter    approx. 76M       not provided         not provided
    December quarter     approx. 91M       not provided         not provided
    Calendar year range
     (approx.)                  301M        368M - 388M          373M - 393M

                           Midpoint          Midpoint            Midpoint
    CDMA/WCDMA units    approx. 301M       approx. 378M         approx. 383M
    CDMA units          approx. 200M       approx. 203M         approx. 208M
    WCDMA units         approx. 101M       approx. 175M         approx. 175M

    (1) Prior FY 2007 estimates did not reflect the potential adverse impact
        on our results of Nokia not paying royalties in the fourth quarter
        of fiscal 2007 for June quarter shipments.  Our prior estimate of such
        impact was approximately $0.04 to $0.06 diluted earnings per share.
    (2) Current FY 2007 estimates do not reflect the potential opportunity of
        Nokia paying royalties in the fourth quarter of fiscal 2007 for
        June quarter shipments.  Our current estimate of such opportunity is
        approximately $0.04 to $0.05 diluted earnings per share.

    Sums may not equal totals due to rounding.


Results of Business Segments

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

    Second Quarter - Fiscal Year 2007

                                                                  Reconciling
    Segments                    QCT          QTL          QWI       Items(2)
    Revenues                  $1,259         $759         $198           $5
    Change from prior year       24%          19%          11%          N/M
    Change from prior quarter     2%          27%           5%          N/M
    EBT                         $368         $636         $ 20          $82
    Change from prior year       26%           8%          25%          N/M
    Change from prior quarter    16%          28%           0%          N/M

                                   Estimated                           Total
                     QUALCOMM     Share-Based    In-Process          QUALCOMM
    Segments         Pro Forma  Compensation(3)     R&D      QSI(4)   (GAAP)
    Revenues          $2,221         $--            $--       $--     $2,221
    Change from
     prior year           21%                                             21%
    Change from
     prior quarter        10%                                             10%
    EBT               $1,106       $(126)          $(10)     $(42)      $928
    Change from
     prior year           15%          5%           (52%)      17%        18%
    Change from
     prior quarter        16%         (3%)          N/M        (2%)       19%
    Net income (loss)   $838        $(83)           $(9)     $(20)      $726
    Change from
     prior year           19%          6%           (57%)      43%        22%
    Change from
     prior quarter        16%         (3%)          N/M        (5%)       12%
    Diluted EPS        $0.50      $(0.05)        $(0.01)   $(0.01)     $0.43
    Change from
     prior year           22%          0%             0%        0%        26%
    Change from
     prior quarter        16%          0%           N/M         0%        13%
    Diluted shares
     used              1,693       1,693          1,693     1,693      1,693


    First Quarter - Fiscal Year 2007
                                                                  Reconciling
    Segments                    QCT          QTL          QWI      Items(2)
    Revenues                  $1,230         $600         $188           $1
    EBT                          316          498           20          118

                                   Estimated                           Total
                     QUALCOMM     Share-Based       Tax              QUALCOMM
    Segments         Pro Forma  Compensation(3)  Items(5)    QSI(4)   (GAAP)
    Revenues          $2,019         $--            $--       $--     $2,019
    EBT                  952        (130)            --       (43)       779
    Net income (loss)    722         (86)            33       (21)       648
    Diluted EPS        $0.43      $(0.05)         $0.02    $(0.01)     $0.38
    Diluted shares
     used              1,685       1,685          1,685     1,685      1,685


    Second Quarter - Fiscal Year 2006
                                                                  Reconciling
    Segments                  QCT(1)*     QTL(1)*     QWI(1)*     Items(1)(2)*
    Revenues                   $1,018        $640        $178         $(2)
    EBT                           291         587          16          68

                                   Estimated                           Total
                     QUALCOMM     Share-Based    In-Process          QUALCOMM
    Segments         Pro Forma  Compensation(3)      R&D     QSI(4)   (GAAP)
    Revenues          $1,834         $--            $--       $--     $1,834
    EBT                  962        (120)           (21)      (36)       785
    Net income (loss)    706         (78)           (21)      (14)       593
    Diluted EPS        $0.41      $(0.05)        $(0.01)   $(0.01)     $0.34
    Diluted shares
     used              1,721       1,721          1,721     1,721      1,721


    Third Quarter - Fiscal Year 2006
                                                                  Reconciling
    Segments                  QCT(1)*     QTL(1)*     QWI(1)*     Items(1)(2)*
    Revenues                   $1,133        $640        $178         $--
    EBT                           346         576          18          36

                                          Estimated                 Total
                             QUALCOMM    Share-Based               QUALCOMM
    Segments                Pro Forma   Compensation(3)   QSI(4)    (GAAP)
    Revenues                   $1,951         $--         $--      $1,951
    EBT                           976        (126)        (26)        824
    Net income (loss)             726         (83)         --         643
    Diluted EPS                 $0.42      $(0.05)        $--       $0.37
    Diluted shares used         1,728       1,728       1,728       1,728


    Twelve Months - Fiscal Year 2006
                                                                  Reconciling
    Segments                  QCT(1)*     QTL(1)*     QWI(1)*     Items(1)(2)*
    Revenues                   $4,332      $2,467        $731         $(4)
    EBT                         1,298       2,233          78         197

                            Estimated                                  Total
               QUALCOMM    Share-Based       Tax   In-Process         QUALCOMM
    Segments   Pro Forma  Compensation(3)   Items     R&D      QSI(4)  (GAAP)
    Revenues     $7,526        $--           $--      $--       $--    $7,526
    EBT           3,806       (495)           --      (22)     (133)    3,156
    Net income
     (loss)       2,804       (320)           40      (22)      (32)    2,470
    Diluted EPS   $1.64     $(0.19)        $0.02   $(0.01)   $(0.02)    $1.44
    Diluted
     shares
     used         1,711      1,711         1,711    1,711     1,711     1,711


    Six Months - Fiscal Year 2007
                                                                  Reconciling
    Segments                    QCT          QTL          QWI      Items(2)
    Revenues                  $2,490       $1,359         $387           $4
    Change from prior year        21%          17%           8%         N/M
    EBT                         $684       $1,134          $40         $200
    Change from prior year         9%           6%          21%         N/M

                            Estimated                                  Total
               QUALCOMM    Share-Based       Tax    In-Process        QUALCOMM
    Segments   Pro Forma  Compensation(3)  Items(5)    R&D     QSI(4)  (GAAP)
    Revenues     $4,240        $--           $--       $--      $--    $4,240
    Change from
     prior year      19%                                                   19%
    EBT          $2,058      $(257)          $--      $(10)    $(85)   $1,706
    Change from
     prior year      10%         6%                    (52%)      1%       12%
    Net income
     (loss)      $1,560      $(169)          $33       $(9)    $(42)   $1,373
    Change from
     prior year      14%         6%          (41%)     (57%)     20%       13%
    Diluted EPS   $0.92     $(0.10)        $0.02    $(0.01)  $(0.02)    $0.81
    Change from
     prior year      15%        11%          (33%)       0%       0%       14%
    Diluted
     shares
     used         1,689      1,689         1,689     1,689    1,689     1,689


    Six Months - Fiscal Year 2006
                                                                  Reconciling
    Segments                  QCT(1)*     QTL(1)*     QWI(1)*     Items(1)(2)*
    Revenues                   $2,051      $1,165        $357          $2
    EBT                           629       1,066          33         140

                            Estimated                                  Total
               QUALCOMM    Share-Based       Tax   In-Process         QUALCOMM
    Segments   Pro Forma  Compensation(3)   Items     R&D      QSI(4)  (GAAP)
    Revenues     $3,575        $--            $--     $--       $--    $3,575
    EBT           1,868       (242)            --     (21)      (84)    1,521
    Net income    1,373       (160)            56     (21)      (35)    1,213
    Diluted EPS   $0.80     $(0.09)         $0.03  $(0.01)   $(0.02)    $0.71
    Diluted
     shares
     used         1,711      1,711          1,711   1,711     1,711     1,711


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

    N/M - Not Meaningful

    Sums may not equal totals due to rounding.

    *As adjusted to conform to 2007 segment presentation


Conference Call

QUALCOMM's second quarter fiscal 2007 earnings conference call will be broadcast live on April 25, 2007 beginning at 1:45 p.m. Pacific Daylight Time (PDT) on the Company's web site at: www.qualcomm.com. This conference call may contain forward-looking financial information. The conference call will include a discussion of "non-GAAP financial measures" as that term is defined in Regulation G. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company's financial results prepared in accordance with GAAP, as well as the other material financial and statistical information to be discussed in the conference call, will be posted on the Company's Investor Relations web site at www.qualcomm.com immediately prior to commencement of the call. A taped audio replay will be available via telephone on April 25, 2007 beginning at approximately 5:30 p.m. (PDT) through June 25, 2007 at 9:00 p.m. (PDT). To listen to the replay, U.S. callers may dial (800) 642-1687 and international callers may dial (706) 645-9291. U.S. and international callers should use reservation number 1486859. An audio replay of the conference call will be available on the Company's web site at www.qualcomm.com for two weeks following the live call.

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

QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., QUALCOMM is included in the S&P 500 Index and is a 2006 FORTUNE 500(R) company traded on The Nasdaq Stock Market(R) under the ticker symbol QCOM.

Note Regarding Use of Non-GAAP Financial Measures

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

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

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

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

Note Regarding Forward-Looking Statements

In addition to the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks associated with: the rate of development, deployment and commercial acceptance of CDMA-based networks and CDMA-based technology, including CDMA2000 1X, 1xEV-DO, WCDMA and HSDPA both domestically and internationally; our dependence on major customers and licensees; attacks on our licensing business model, including results of current and future litigation and arbitration proceedings as well as actions of governmental or quasi-governmental bodies, and the costs we incur in connection therewith; fluctuations in the demand for CDMA-based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; our dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; the development, deployment and commercial acceptance of the MediaFLO USA network and FLO(TM) technology; as well as the other risks detailed from time-to-time in the Company's SEC reports.

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

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



                            QUALCOMM Incorporated
                    CONSOLIDATED STATEMENTS OF OPERATIONS
          THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
              PRO FORMA RESULTS TO TOTAL QUALCOMM (GAAP) RESULTS
                     (In millions, except per share data)
                                 (Unaudited)

                                  Three Months Ended April 1, 2007
                                   Estimated                         Total
                     QUALCOMM     Share-Based    In-Process        QUALCOMM
                     Pro Forma  Compensation(a)     R&D     QSI     (GAAP)

    Revenues:
      Equipment and
       services       $1,370          $--          $--      $--    $1,370
      Licensing and
       royalty fees      851           --           --       --       851
         Total
          revenues     2,221           --           --       --     2,221

    Operating
     expenses:
      Cost of
       equipment
       and services
       revenues          616            9           --        9       634
      Research and
       development       370           58           10       16       454
      Selling,
       general and
       administrative    301           59           --       25       385
        Total
         operating
         expenses      1,287          126           10       50     1,473

    Operating income
     (loss)              934         (126)         (10)     (50)      748

    Investment income,
     net                 172(b)        --           --        8(c)    180
    Income (loss)
     before income
     taxes             1,106         (126)         (10)     (42)      928
    Income tax
     (expense)
     benefit            (268)(d)       43            1       22(e)   (202)(d)
    Net income (loss)   $838         $(83)         $(9)    $(20)     $726

    Earnings (loss)
     per common share:
      Diluted          $0.50       $(0.05)      $(0.01)  $(0.01)    $0.43

    Shares used in
     per share
     calculations:
      Diluted          1,693        1,693        1,693    1,693     1,693


    Supplemental
     Financial Data:
    Operating
     Cash Flow        $1,159         $(87)(g)     $(10)    $(71)     $991
    Operating
     Cash Flow as a
     % of Revenues        52%                                          45%
    Free Cash
     Flow (f)         $1,087         $(87)(g)     $(10)    $(91)     $899
    Free Cash Flow
     as a % of
     Revenues             49%                                          40%

    (a) Estimated share-based compensation presented above and excluded from
        pro forma results does not include $1 million, net of tax, related to
        share-based awards granted under the executive bonus program.
    (b) Includes $125 million in interest and dividend income related to
        cash, cash equivalents and marketable securities, which are not part
        of the Company's strategic investment portfolio, and $49 million in
        net realized gains on investments, partially offset by $1 million in
        other-than-temporary losses on investments and $1 million in interest
        expense.
    (c) Includes $6 million in net realized gains on investments and
        $3 million in interest and dividend income, partially offset by
        $1 million in interest expense.
    (d) The second quarter of fiscal 2007 tax rates are approximately 22% for
        total QUALCOMM (GAAP) and approximately 24% for QUALCOMM pro forma.
    (e) At fiscal year-end, the sum of the quarterly tax provisions for each
        column, including QSI, will equal the annual tax provisions for each
        column computed in accordance with GAAP.  In interim quarters, the
        tax provision for the QSI operating segment is computed by subtracting
        the tax provision for QUALCOMM pro forma and the tax provisions
        related to estimated share-based compensation and in-process R&D from
        the tax provision for total QUALCOMM (GAAP).
    (f) Free Cash Flow is calculated as net cash provided by operating
        activities less capital expenditures.  Reconciliation of these amounts
        is included in the Reconciliation of Pro Forma Free Cash Flows to
        Total QUALCOMM Net Cash Provided by Operating Activities for the
        three months ended April 1, 2007, included herein.
    (g) Incremental tax benefits from stock options exercised during the
        period.



                            QUALCOMM Incorporated
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
              PRO FORMA RESULTS TO TOTAL QUALCOMM (GAAP) RESULTS
                     (In millions, except per share data)
                                 (Unaudited)

                                  Six Months Ended April 1, 2007
                             Estimated       Tax       In-          Total
                 QUALCOMM   Share-Based     Adjust-  Process       QUALCOMM
                Pro Forma  Compensation(a)   ment      R&D    QSI   (GAAP)

    Revenues:
      Equipment
       and
       services   $2,712       $--           $--      $--     $--   $2,712
      Licensing
       and
       royalty
       fees        1,528        --            --       --      --    1,528
                   4,240        --            --       --      --    4,240

    Operating
     expenses:
      Cost of
       equipment
       and
       services
       revenues    1,239        20            --       --       9    1,268
      Research
       and
       development   737       115            --       10      33      895
      Selling,
       general and
       admini-
       strative      582       122            --       --      50      754
        Total
         operating
         expenses  2,558       257            --       10      92    2,917

    Operating
     income (loss) 1,682      (257)           --      (10)    (92)   1,323

    Investment
     income
     (expense),
     net             376(b)     --            --       --       7(c)   383
    Income (loss)
     before income
     taxes         2,058      (257)           --      (10)    (85)   1,706
    Income tax
     (expense)
     benefit        (498)       88            33        1      43(e)  (333)(d)
    Net income
     (loss)       $1,560     $(169)          $33      $(9)   $(42)  $1,373

    Earnings (loss)
     per common
     share:
      Diluted      $0.92    $(0.10)        $0.02   $(0.01) $(0.02)   $0.81

    Shares used
     in per share
     calculations:
      Diluted      1,689     1,689         1,689    1,689   1,689    1,689


    Supplemental
     Financial
     Data:
    Operating
     Cash Flow    $1,994     $(119)(g)       $--     $(10)   $(85)  $1,780
    Operating
     Cash Flow
     as a % of
     Revenue          47%                                               42%
    Free Cash
     Flow (f)     $1,633     $(119)(g)       $--     $(10)  $(138)  $1,366
    Free Cash
     Flow
     as a % of
     Revenue          39%                                               32%

    (a) Estimated share-based compensation presented above and excluded from
        pro forma results does not include $1 million, net of tax, related to
        share-based awards granted under the executive bonus program.
    (b) Includes $266 million in interest and dividend income related to
        cash, cash equivalents and marketable securities, which are not part
        of the Company's strategic investment portfolio, $112 million in net
        realized gains on investments, partially offset by $1 million in
        other-than-temporary losses on investments and $1 million in interest
        expense.
    (c) Includes $7 million in net realized gains on investments and
        $4 million in interest and dividend income, partially offset by
        $2 million in interest expense, $1 million in other-than-temporary
        losses on investments and $1 million in losses on derivatives.
    (d) The tax rate of 20% for the first six months of fiscal 2007 for total
        QUALCOMM (GAAP) is lower than the estimated annual effective tax rate
        of 22% due primarily to $33 million of tax benefits recorded in the
        first quarter related to the retroactive extension of the federal
        research and development tax credit.
    (e) At fiscal year-end, the sum of the quarterly tax provisions for each
        column, including QSI, will equal the annual tax provisions for each
        column computed in accordance with GAAP.  In interim quarters, the
        tax provision for the QSI operating segment is computed by subtracting
        the tax provision for QUALCOMM pro forma, the tax adjustment column
        and the tax provisions related to estimated share-based compensation
        and in-process R&D from the tax provision for total QUALCOMM (GAAP).
    (f) Free Cash Flow is calculated as net cash provided by operating
        activities less capital expenditures.  Reconciliation of these
        amounts is included in the Reconciliation of Pro Forma Free Cash Flows
        to Total QUALCOMM Net Cash Provided by Operating Activities for the
        six months ended April 1, 2007, included herein.
    (g) Incremental tax benefits from stock options exercised during the
        period.



                            QUALCOMM Incorporated
                RECONCILIATION OF PRO FORMA FREE CASH FLOWS TO
       TOTAL QUALCOMM (GAAP) NET CASH PROVIDED BY OPERATING ACTIVITIES
                      AND OTHER SUPPLEMENTAL DISCLOSURES
                                (In millions)
                                 (Unaudited)

                                 Three Months Ended April 1, 2007
                                   Estimated                         Total
                     QUALCOMM     Share-Based    In-Process        QUALCOMM
                     Pro Forma   Compensation        R&D     QSI    (GAAP)
    Net cash
     provided
     (used) by
     operating
     activities        $1,159        $(87)(a)       $(10)   $(71)    $991
    Less: capital
     expenditures         (72)         --             --     (20)     (92)
    Free cash flow     $1,087        $(87)          $(10)   $(91)    $899

    Other
     supplemental
     cash
     disclosures:
      Cash transfers
       from QSI (1)        $7         $--            $--     $(7)     $--
      Cash transfers
       to QSI (2)         (99)         --             --      99       --
      Net cash
       transfers         $(92)        $--            $--     $92      $--


                                  Six Months Ended April 1, 2007
                                   Estimated                         Total
                     QUALCOMM     Share-Based    In-Process        QUALCOMM
                     Pro Forma   Compensation        R&D     QSI    (GAAP)
    Net cash
     provided
     (used) by
     operating
     activities        $1,994       $(119)(a)       $(10)   $(85)  $1,780
    Less: capital
     expenditures        (361)         --             --     (53)    (414)
    Free cash flow     $1,633       $(119)          $(10)  $(138)  $1,366

    Other
     supplemental
     cash
     disclosures:
      Cash transfers
       from QSI (1)       $13         $--            $--    $(13)     $--
      Cash transfers
       to QSI (2)        (194)         --             --     194       --
      Net cash
       transfers        $(181)        $--            $--    $181      $--

    (1) Cash from loan payments and sale of equity securities.
    (2) Funding for strategic debt and equity investments and other QSI
        operating expenses.


                               Three Months Ended March 26, 2006
                                   Estimated                         Total
                     QUALCOMM     Share-Based    In-Process        QUALCOMM
                     Pro Forma   Compensation        R&D     QSI    (GAAP)
    Net cash
     provided
     (used) by
     operating
     activities        $1,072       $(172)(a)        $--    $(11)    $889
    Less: capital
     expenditures        (125)         --             --     (36)    (161)
    Free cash flow       $947       $(172)           $--    $(47)    $728


                                 Six Months Ended March 26, 2006
                                   Estimated                         Total
                     QUALCOMM     Share-Based    In-Process        QUALCOMM
                     Pro Forma   Compensation        R&D     QSI    (GAAP)

    Net cash
     provided
     (used) by
     operating
     activities        $1,785       $(273)(a)        $--    $(27)  $1,485
    Less: capital
     expenditures        (307)         --             --     (67)    (374)
    Free cash flow     $1,478       $(273)           $--    $(94)  $1,111

    (a) Incremental tax benefits from stock options exercised during the
        period.



                            QUALCOMM Incorporated
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In millions, except per share data)
                                 (Unaudited)

                                    ASSETS
                                                    April 1,    September 24,
                                                      2007          2006
    Current assets:
      Cash and cash equivalents                       $3,353         $1,607
      Marketable securities                            3,198          4,114
      Accounts receivable, net                           714            700
      Inventories                                        347            250
      Deferred tax assets                                232            235
      Other current assets                               234            143
        Total current assets                           8,078          7,049
    Marketable securities                              4,751          4,228
    Property, plant and equipment, net                 1,582          1,482
    Goodwill                                           1,320          1,230
    Deferred tax assets                                  486            512
    Other assets                                       1,037            707
        Total assets                                 $17,254        $15,208

                      LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Trade accounts payable                            $566           $420
      Payroll and other benefits related liabilities     240            273
      Unearned revenue                                   289            197
      Income taxes payable                               298            137
      Other current liabilities                          433            395
        Total current liabilities                      1,826          1,422
    Unearned revenue                                     151            141
    Other liabilities                                    247            239
        Total liabilities                              2,224          1,802

    Stockholders' equity:
      Preferred stock, $0.0001 par value;
       issuable in series; 8 shares authorized;
       none outstanding at April 1, 2007 and
       September 24, 2006                                 --             --
      Common stock, $0.0001 par value;
       6,000 shares authorized; 1,665 and 1,652
       shares issued and outstanding at
       April 1, 2007 and September 24, 2006,
       respectively                                       --             --
      Paid-in capital                                  7,758          7,242
      Retained earnings                                7,075          6,100
      Accumulated other comprehensive income             197             64
        Total stockholders' equity                    15,030         13,406
        Total liabilities and stockholders' equity   $17,254        $15,208



                             QUALCOMM Incorporated
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In millions, except per share data)
                                  (Unaudited)

                                      Three Months Ended     Six Months Ended
                                      April 1, March 26,    April 1, March 26,
                                        2007     2006         2007     2006
    Revenues:
      Equipment and services           $1,370   $1,122       $2,712   $2,271
      Licensing and royalty fees          851      712        1,528    1,304
        Total revenues                  2,221    1,834        4,240    3,575

    Operating expenses:
      Cost of equipment and
       services revenues                  634      521        1,268    1,037
      Research and development            454      390          895      731
      Selling, general and
       administrative                     385      263          754      502
        Total operating expenses        1,473    1,174        2,917    2,270

    Operating income                      748      660        1,323    1,305

    Investment income, net                180      125          383      216
    Income before income taxes            928      785        1,706    1,521
    Income tax expense                   (202)    (192)        (333)    (308)
    Net income                           $726     $593       $1,373   $1,213

    Basic earnings per common
     share                              $0.44    $0.36        $0.83    $0.73
    Diluted earnings per common
     share                              $0.43    $0.34        $0.81    $0.71

    Shares used in per share
     calculations:
      Basic                             1,659    1,664        1,656    1,655
      Diluted                           1,693    1,721        1,689    1,711

    Dividends per share paid            $0.24    $0.18        $0.24    $0.18

    Dividends per share announced       $0.12    $0.09        $0.24    $0.18



                            QUALCOMM Incorporated
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In millions)
                                 (Unaudited)

                                      Three Months Ended     Six Months Ended
                                      April 1, March 26,    April 1, March 26,
                                        2007     2006         2007     2006
    Operating Activities:
    Net income                           $726     $593       $1,373   $1,213
    Adjustments to reconcile net
     income to net cash provided by
     operating activities:
      Depreciation and amortization        93       63          184      121
      Non-cash portion of share-based
       compensation expense               127      120          257      242
      Incremental tax benefits from
       stock options exercised            (87)    (172)        (119)    (273)
      Net realized gains on
       marketable securities and
       other investments                  (55)     (40)        (119)     (60)
      Non-cash income tax expense         131      116          229      220
      Other items, net                      2       22            8       26
    Changes in assets and liabilities,
     net of effects of acquisitions:
      Accounts receivable, net             (8)     157          (17)     (14)
      Inventories                         (17)     (21)         (98)     (39)
      Other assets                        (57)       5         (155)      21
      Trade accounts payable               87       19          134      106
      Payroll, benefits and other
       liabilities                          7       21            1      (65)
      Unearned revenue                     42        6          102      (13)
      Net cash provided by operating
       activities                         991      889        1,780    1,485
    Investing Activities:
      Capital expenditures                (92)    (161)        (414)    (374)
      Purchases of available-for-sale
       securities                      (1,908)  (2,744)      (3,581)  (6,062)
      Proceeds from sale of
       available-for-sale
       securities                       1,909    2,283        4,345    4,443
      Other investments and
       acquisitions, net of cash
       acquired                            (7)    (264)        (227)    (270)
      Other items, net                      3       41            1       45
      Net cash (used) provided by
       investing activities               (95)    (845)         124   (2,218)
    Financing Activities:
      Proceeds from issuance of common
       stock                              158      287          255      468
      Incremental tax benefits from
       stock options exercised             87      172          119      273
      Dividends paid                     (398)    (298)        (398)    (298)
      Repurchase and retirement of
       common stock                       (40)      --         (136)      --
      Net cash (used) provided by
       financing activities              (193)     161         (160)     443
      Effect of exchange rate changes
       on cash                              1       (3)           2       (1)
    Net increase (decrease) in cash and
     cash equivalents                     704      202        1,746     (291)
    Cash and cash equivalents at
     beginning of period                2,649    1,577        1,607    2,070
    Cash and cash equivalents at
     end of period                     $3,353   $1,779       $3,353   $1,779


SOURCE QUALCOMM Incorporated