Interview: Qualcomm
>> qualcomm has been on a roll.% -over the past year, the stock has soared about 80%, far outpacing the broader market . today, i spoke with qualcomm chief executive irwin jacobs about his outlook.
>> i can’t update until we have our financial reports but as was noted at that time, we are having supply problems. we are catching up with them but it probably will extend throughout the end of the year. cdma has been growing well worldwide and a lot of phones are bought and we’re working hard to keep up with manufacturers’ requirements.
>> can you give us an idea about how you’ll keep up with demand, what steps you’re taking to meet demand?
>> a couple of things. first of all, we have upgraded the chips to our next generation chips and in that case we get actually more chips on a wafer, somewhat technical discussion, but it gives us a better supply of the chips. and the manufacturers then had to upgrade their phones to be able to make use of the newer chips so that’s already been happening. there are still shortages on the radio frequency part of the phones and we’ve been working with the various suppliers to increase those. so we look at different ways. the market clearly is up. i think cellular will continue to grow for quite a time to come. so we’re working with the various suppliers on a longer-term basis to make sure their supply can match our needs.
>> and you find yourself today in brazil. give us a sense of how fast you expect to grow in latin america and what you hear down there. what’s needed?
>> brazil has been a very good market for us, growing faster than we’ve expected in the past. the reason i’m down there was a conference called future com, and i was here with the largest cellular provider in brazil and they use cdma equipment and they were introducing several new services based on our latest technology. they were using the global positioning system, g.p.s. one technology to provide a whole range of new location-based services and our latest higher data rate service to 1-x dvo technology, and introducing that along with video downloads and audio downloads.
>> there are suggestions you can boost your share of the market to 60% of the global wireless handset market by twine. how―by 2009. how realistic is that projection?
>> the cdma is broadening with wcdma so we’re seeing that expand in europe and elsewhere in asia. the market is growing, there are clearly new suppliers because of the new technologies entering the market so we have to fight for our share but we have a good basis because we know cdma so well and because we’ve been delivering third generation chip sets for phones as far as two years ago, that gives us the advantage of adding the additional capabilities you need beyond communication―as i mentioned, position location, video decoding, decoding, audio coding, decoding, the ability to take pictures, a whole range of capabilities on our chips.
>> on the other side of things, there are those out there that are more cautious on your stock. the morgan stanley analyst said your earnings growth may slow next year as operating expenses rise and consumers replace handsets more slowly than they have been. what’s your reaction to that?
>> well, we’ll have to wait and see, obviously. what we have been seeing to date is a very good replacement market because of the new technologies coming in. i have not yet seen any slowing down in that replacement. since we’re also going to wcdma, there’s a new set of markets opening. we are affected by the world decline and we’ll see how that moves ahead but as far as technology and consumer acceptance of technology, that has been very strong.
>> other investors point to your balance sheet and say you have $5.5 billion in cash, no debt and you’re free to pursue whatever you’d like. what will you do with that money to generate returns for investors?
>> of course, we introduceed dividends a year ago. we’ve increased those twice since the initial introduction. we continue to look at stock buybacks when that’s appropriate. we are also, of course, always looking for other ways to invest our money but we certainly have a very good availability of cash so it doesn’t limit our strategic alternatives. our main objective is increasing shareholder value.
>> do you have a sense of whether you would enter a share buyback program any time soon?
>> we have a share buyback program in place and occasionally we go into the market to buy shares.
>> irwin jacobs, c.e.o. of qualcomm. those shares up again today, better by 3.8% at $1.52, at $41.02. michael ovitz says he was “pushed out the sixth floor window” by michael eisner and other managers. we’ll have the latest on that trial coming up.
