US : QUALCOMM Incorporated announced results for its first quarter fiscal 2005 ended December 26, 2004.

Inset is Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM who explains how 3G is driving results for the company.

Revenues were $1.4 billion in the first fiscal quarter, up 15 percent year-over-year and 24 percent sequentially(1). First fiscal quarter net income was $513 million and diluted earnings per share were $0.30, up 46 percent and 43 percent, respectively, year-over-year, and up 31 percent and 30 percent, respectively, sequentially(1).

Revenues excluding the QUALCOMM Strategic Initiatives (QSI) segment were $1.4 billion in the first fiscal quarter, up 21 percent year-over-year and 1 percent sequentially, when compared to 2004 results excluding QSI prepared under the "New Method"(1) of recording royalties. First fiscal quarter net income excluding the QSI segment was $474 million and diluted earnings per share were $0.28, up 21 percent and 17 percent, respectively, year-over-year, and down 5 percent and 7 percent, respectively, sequentially. Throughout, comparative results excluding the QSI segment are presented as if the New Method had been in use in the prior year.

Detailed reconciliations between total QUALCOMM results and QUALCOMM results excluding QSI (for the first quarter fiscal 2005) and between total QUALCOMM results and QUALCOMM results excluding QSI prepared under the New Method of recording royalties (for each quarter in 2004 and in total) are included at the end of this news release. Prior period reconciliations are presented on our Investor Relations web page at www.qualcomm.com.

"The deployment and expansion of third generation (3G) Code Division Multiple Access (CDMA) networks and devices continues to drive our results," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM. "Wideband Code Division Multiple Access (WCDMA) contributed 32 percent to our royalty revenues from September quarter shipments, demonstrating further expansion of WCDMA networks and increasing device sales. Consumers and enterprises worldwide are attracted by and benefiting from an increasing range of entertaining and useful applications. The downloading of applications and content to wireless phones has grown dramatically, providing incremental revenue growth to 3G operators. By November of 2003, there had been more than 60 million downloads of BREW applications since the first BREW operator launched services in November of 2001. By November of 2004, over 200 million downloads of applications had occurred using the BREW system. BREW is now offered by 37 operators in 24 countries under various service brand names and the BREW developer community is thriving."

"With the transition to 3G CDMA well under way, the growing demand for advanced features and services at an affordable market price is compelling operators to further upgrade to the higher data rates and resulting lower cost enabled by 1xEV-DO for CDMA2000(R) and by HSDPA (High Speed Downlink Packet Access), available soon for WCDMA. CDMA2000 operators are rapidly expanding 1xEV-DO networks and using the increased capacity to offer multimedia services, which have proven popular in Korea and Japan. We recently announced first samples of the CSM6800(TM), the base station chip that supports CDMA2000 1xEV-DO Revision A. With higher speed, especially on the reverse link, as well as lower latency, Revision A, when deployed, will enable the consumer and enterprise to not only receive, but also send large amounts of data using their wireless device. Revision A is designed to support fully-competitive push-to-talk services and high capacity, high quality VoIP (Voice over Internet Protocol). Competition among network operators is clearly speeding the 2G to 3G transition and the further evolution of 3G performance, services, and devices."

"The wireless market is changing rapidly and will continue to do so for the foreseeable future. The mobile phone is becoming the essential consumer device and our strategy of comprehensive feature integration in our Mobile Station Modem(TM) (MSM(TM)) digital chipset is enabling convergence of a broad array of consumer functions within the ubiquitous phone. In a complementary cycle, the BREW platform supports the availability of compelling applications in the marketplace to take advantage of these advanced features."

Research and development (R&D) expenses were $228 million in the first fiscal quarter, up 52 percent year-over-year, largely attributable to increased headcount related to development of integrated circuit products and initiatives to support multimedia applications, high-speed wireless Internet access and multimode, multiband, multinetwork products including CDMA2000(R) 1xEV-DO, WCDMA, and HSDPA. This includes $9 million in R&D expenses attributable to the QSI segment.

Selling, general and administrative (SG&A) expenses were $148 million in the first fiscal quarter, up 25 percent year-over-year, largely attributable to increases in employee related headcount expenses to support our growing worldwide customer base, and professional fees related to legal, patent and audit activities. This includes $5 million in SG&A expenses attributable to the QSI segment.

Our fiscal 2005 effective income tax rate is estimated to be approximately 28 percent, compared to approximately 25 percent in fiscal 2004. Excluding the QSI segment, our fiscal 2005 effective tax rate is estimated to be approximately 30 percent, compared to 27 percent in fiscal 2004. The increased estimated annual effective tax rates as compared to the prior fiscal year are primarily due to proportionately less foreign earnings subject to a lower rate. The 2004 Working Families Act, enacted on October 4, 2004, extended the research and development tax credit. As a result, the effective tax rates in the first quarter of fiscal 2005 of approximately 27 percent for total QUALCOMM and 29 percent excluding QSI are lower than the expected annual effective tax rates.

QUALCOMM Strategic Initiatives

The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic investments and related income and expenses. The first quarter fiscal 2005 results consisted primarily of $51 million in net realized gains on investments and $3 million in gains on derivative instruments, partially offset by $14 million of operating expenses, including $9 million in R&D costs related to MediaFLO(TM) USA. Total QUALCOMM results for the first quarter of fiscal 2005 include $0.02 of diluted earnings per share for the QSI segment.

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 and asset impairments cannot be accurately forecast. Accordingly, the Company excludes 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.

This outlook does not include the effects in the Company's fourth quarter of fiscal 2005 from expensing equity-based compensation programs under SFAS No. 123R, Share-Based Payment, which is scheduled to be effective for fiscal periods beginning after June 15, 2005. The Company will not adopt the revised standard prior to the fourth quarter of fiscal 2005.