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QUALCOMM (QCOM) Steven M. Mollenkopf on Q2 2016 Results - Earnings Call Transcript

Q2 2016 Earnings Call

April 20, 2016 4:45 pm ET

Executives

Warren Kneeshaw - Vice President-Investor Relations

Steven M. Mollenkopf - Chief Executive Officer & Director

Derek K. Aberle - President

George S. Davis - Chief Financial Officer & Executive Vice President

Cristiano R. Amon - EVP, Qualcomm Technologies, Inc.-President, Qualcomm CDMA Technologies, Qualcomm, Inc.

Analysts

James E. Faucette - Morgan Stanley & Co. LLC

Timothy Patrick Long - BMO Capital Markets (United States)

Simona K. Jankowski - Goldman Sachs & Co.

T. Michael Walkley - Canaccord Genuity

Rod B. Hall - JPMorgan Securities LLC

Blayne Curtis - Barclays Capital, Inc.

Kulbinder S. Garcha - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Timothy Arcuri - Cowen & Co. LLC

Stacy Aaron Rasgon - Bernstein Research

Tal Liani - Merrill Lynch, Pierce, Fenner & Smith, Inc.

Tavis C. McCourt - Raymond James & Associates, Inc.

David M. Wong - Wells Fargo Securities LLC

C.J. Muse - Evercore ISI

Edward F. Snyder - Charter Equity Research, Inc.

Dean Grumlose - Stifel, Nicolaus & Co., Inc.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm second quarter fiscal 2016 earnings conference call. As a reminder, this conference is being recorded April 20, 2016. The playback number for today's call is 855-859-2056. International callers please dial 404-537-3406. The playback reservation number is 82473415.

I would now like to turn the call over to Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.

Warren Kneeshaw - Vice President-Investor Relations

Thank you and good afternoon. Today's call will include prepared remarks by Steve Mollenkopf, Derek Aberle, and George Davis. In addition, Cristiano Amon and Don Rosenberg will join the question-and-answer session. You can access our earnings release and an executive presentation that accompany this call on our Investor Relations website. This call is also being webcast on Qualcomm.com, and a replay will be available on the website later today.

During this conference call, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. As well, we will make forward-looking statements regarding future events or the future business or results of the company. Actual events or results could differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recent 10-Q, which contain important factors that could cause actual results to differ materially from the forward-looking statements.

And now to comments from Qualcomm's Chief Executive Officer, Steve Mollenkopf.

Steven M. Mollenkopf - Chief Executive Officer & Director

Thank you, Warren, and good afternoon, everyone.

We delivered a stronger than expected quarter as we continued to execute on our strategy to position the company for the next phase of profitable growth. Non-GAAP earnings per share were above the high end of our guidance range, driven by strength in both QTL and QCT.

QTL revenues reflect seasonably strong December quarter activity, and we are pleased with the progress we are making in China. We signed several new China licenses in the first few months, with more than 100 companies now having accepted the NDRC [National Development and Reform Commission] terms. We remain in active discussions with the few key Chinese OEMs that have not yet signed and believe we are making progress in those discussions. We are also pleased to have recently resolved our licensing dispute with LG.

In QCT, our chipset shipments were above the midpoint of our prior guidance range, driven by strong demand from Chinese OEMs, and we had favorable product costs.

During the quarter, we returned approximately $2.3 billion to stockholders through dividends and stock repurchases. We also announced a 10% increase in our quarterly cash dividend, reflecting our confidence in the strength of our ongoing cash flows and future earnings growth. We remain focused on improving our financial trajectory exiting the fiscal year, and we are on track in this regard.