高通 (QCOM) 2004 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the QUALCOMM second quarter conference call.

At this time, all participants are in a listen-only mode.

Later we will conduct a question-and-answer session.

If you have a question, you will need to press the star, followed by the number one on your telephone keypad.

As a reminder this conference is being recorded, April 21, 2004.

The playback number for today's call is 800-633-8284.

International callers please dial 402-977-9140.

The play back reservation number is 21187953.

I would now like to turn the call over to Bill Davidson, Vice President of Investor Relations.

Bill, please go ahead.

Thank you.

Good afternoon.

Today's call will include comments by Dr. Irwin Jacobs, Tony Thornley, Dr. Paul Jacobs, Dr. Sanjay Jha, and Bill Keitel.

An internet presentation and audio broadcast accompanies this call and you can access it by visiting www.qualcomm.com.

During this conference call, if we use any nonGAAP financial measures, as defined by the SEC in regulation G, you will find the required reconciliation's to GAAP on our website.

I'd also direct you to our 10 Q and our earnings release which were filed and furnished respectively with the SEC today and are available on our website.

We may make forward-looking statements that may differ materially from QUALCOMM's actual results.

Please review our SEC filings for a detailed presentation of each of our businesses and associated risks.

I'll begin with a summary of QUALCOMM's second fiscal quarter financial results.

Revenues were $1.2 billion in the second quarter of fiscal 2004, up 20% year-over-year and 1% sequentially.

The second quarter of fiscal 2004 net income was $488 million, up 374% year-over-year and 39% sequentially.

Diluted earnings per share were 58 cents, up 346% year-over-year and 35% sequentially.

The second quarter fiscal 2004 net income excluding the QSI segment was $442 million, up 41% year-over-year and 6% sequentially.

The second quarter fiscal 2004 diluted earnings per share excluding the QSI segment were 53 cents, up 39% year-over-year and 4% sequentially.

Before turning the call over to Dr. Jacobs, I would like to mention that QUALCOMM is hosting an analyst meeting in New York City on May 13th, with detailed presentations from our executive team.

The meeting will be simulcast on our website with audio and slide presentations.

Following opening remarks from Dr. Jacobs the speakers will address anticipated questions for their particular discussion areas.

Bill Keitel will conclude with a summary of financial highlights for the second quarter of fiscal 2004 as well as guidance metrics.

We will then open the discussion to your questions.

Now it is my pleasure to introduce Dr. Irwin Jacobs, Chairman and CEO.

Thank you, Bill and good afternoon everyone.

As obvious from our results, we continue to experience strong growth in CDMA subscribers and handset sales.

The transition from second generation to third generation is off to a strong start.

With over 100 million people now enjoying advanced wireless quality and data features based on 3G CDMA.

With more WCDMA networks approaching commercial status and a wider variety of handsets and devices becoming available during 2004 and 2005 the transition to 3G should accelerate among the 1 billion plus subscribers still on 2G.

Our fiscal second quarter 2004 results exceeded the high end of our estimates, driven by low priced entry level phones in developing markets and by color screens, camera phones, and new applications, including video delivery in developed markets.

We shipped approximately 32 million MSM chips for phones and devices in the quarter, nearly all of which were 3 G CDMA2000 1x and 1x EV-DO up from 28 million one year ago and limited by supply constraints.

We shipped CSM chips supporting approximately 5.7 million equivalent voice channels for new or expanded infrastructure, nearly four times the number of one year ago.

With WCDMA or UMTS uptake increasing and over 4 million cumulative subscribers in Japan and Europe at the end of the quarter, we were working aggressively with leading manufacturers to support their new WCDMA products.

Several have announced the selection of our next generation MSM 6250 highly integrated WCDMA, GSM, GPRS chipset to further increase performance while reducing power, cost and size.

WCDMA infrastructure deployments are expanding with an increasing number of (INAUDIBLE) planning to offer commercial service this calendar year.

We have increased our guidance for WCDMA handsets for calendar 2004 by 2 million to 17 million units.

For the December quarter, WCDMA royalties constituted approximately 12% of total royalties reported.

We anticipate CDMA2000 1X EV-DO usage to expand rapidly this year and next, following the exciting announcement of a nationwide rollout by Verizon, the strong growth in Korea, now with over 6 million DO subscribers and with many new phone models based on the MSM 6500 being introduced in Japan and elsewhere.

The CDMA2000 1x EV-DO revision A and 1x division D standards were completed, both supporting peak rates of 3.1 megabits per second on the forward link and 1.8 megabits per second on the reverse link.

The MSM 6800 and 6700 will fully support these capabilities as well as increase through put and patch through compatibility.

We recently publicly demonstrated three further innovations to increase the value of DO data services.

First, CDMA2000 1x EV-DO gold multicast enables operators to improve the efficiency of multimedia content delivery by allowing content to be transmitted simultaneously to many users.

Second, quality of service enhancements to CDMA2000 1xEV-DO allow operators to specify higher priority and low agency to delay sensitive data such as voice over internet protocol, called VOIP, push-to-chat and video telephony.

We believe the use of VOIP will become increasingly important over DO.

Third, we demonstrated MediaFLO, a secure end to end content distribution product and service enabling efficient delivery of multiple channels of video, substantially delivered during off peak network hours.

Users can browse the channels with a convenient on screen channel guide.

MediaFLO integrates content aggregation, digital rights management, content scheduling and subscription into a single service that scales across unicast networks into multicast networks.

In the quarter, three additional operators launched BREW services, bringing the total number to 26 since the commercial introduction in 2001.

The developer community and the range of applications continue to expand rapidly, driven by the power and applicability of BREW and the demonstrated earnings brought in by existing applications.

QUALCOMM continues to execute extremely well.

Our ability to generate cash allows us to continue our growth, expand our extensive research and development programs and to return value to stockholders.

Reflecting our positive prospects, the QUALCOMM board voted to increase our dividend to 10 cents per quarter.

I will now turn the call over to Tony Thornley for the global business overview.

Thank you, Irwin and good afternoon everybody.

I will address some of the questions that we have been receiving regarding our global business operations.

The first question is when is the world phone expected to be commercial and what is the potential market for for multimode devices.

The wireless industry is rapidly moving toward development of multiband, multimode solutions that address single emerging worldwide markets.

This is especially critical for the enterprise market, which is poised to grow as the wireless industry continues to evolve and additional applications have developed to support the productivity of the mobile work force.

The world phone is a term that has been used to describe the product that will address the market needs for a single handset enabling CDMA, GSM roaming.

One of the first examples of a CDMA GSM world phone includes Samsung's SCH A790 which was announced last month at the cellular telecommunications and internet association trade show.

The phone will be the first to incorporate QCT's MSM 5300 chipset.

We also see the CDMA GSM roaming capability being utilized in China, with China Unicom's World Wind QMO cell phone.

Also VIVO Brazil announced recently at a press conference that this service will be available next year and that the handsets will use QCTs geomode CDMA GSM chipsets.

Other potential market opportunities for the world phone include Australia, southeast Asia, Europe and North America.

Next question is what do you attribute the strength in the overall CDMA handset market to this year?

We are seeing continued growth in the adoption of wireless data and 3G CDMA and WCDMA deployments around the world.

A growing number of operators are experiencing the economic advantages that 3G provides.

Advantages like fast time to market, low cost of voice and data, higher ARPUs, breadth of services and overall return on investment.

We are seeing this market strengthen both in established markets and emerging markets.

In addition, the popularity of compelling wireless applications and new handset features accelerate the demand for color displays and integrated cameras, increasing the volumes of new and replacement handsets sold in these markets.

Next question is what is the status of CDMA 450 deployments.

CDMA 450 is gathering momentum and attention across eastern Europe, Asia, and Latin America.

Several commercial deployments are planned for this year.

In May 2004, Uritel is expected to launch the first commercial 1x EV-DO network operating the 450 Megahertz radio spectrum in the Czech Republic.

In addition, Latvia Telecom plans to launch its CDMA2000 1x network late in the third quarter of fiscal 2004.

CDMA 450 trials are underway in multiple regions, Sweden's Telia and Russia's Euro Weston are both migrating from NFC 450 infrastructure to CDMA 450.

In the Latin American region, Lucent technology is conducting a trial of CDMA 450 technology in Brazil.

In conjunction with the Anisel the federal communications agency in Brazil.

To support commercial deployments of CDMA 450 networks, infrastructure providers including Nortel, Lucent, Wall Ray (ph) and Ericsson continue to develop solutions for operators around the world.

Nortel's European rollout of stand alone radios providers operators with a cost effective means of building on existing NFC 450 infrastructure.

CDMA 2000 1x and 1x EV-DO are also integrated in the same base station to provide operators the ability to customize their metrics, coverage and cost and reduce site acquisition costs.

Additionally, Ericsson added a CDMA 450 solution to its expander offering that enables operators to provide clearer voice calls and data capabilities with higher capacities.

Wall Ray technologies has also successfully built an end to end 450 CDMA 2000 1x network solution.

Finally, the Norwegian Ministry of Transport and Communication, along with the post of Telecommunications Authority has also announced the technology neutral 450 Megahertz licensing process.

The next question is there have been many announcements recently regarding multiple technologies that have targeted the wireless broadband market.

Can you expand on why QUALCOMM believes 1x EV-DO is best suited to address this market?

QUALCOMM participates in many of the standards bodies so we are acutely aware of the developments in this area.

Wireless local area networks are complimentary to wide area networks such as CDMA2000 and WCDMA.

They both provide affordable high speed wireless access for consumers and enterprise.

The high speed data link and limited coverage of Wi-Fi is well suited for private networks and certain public hot spots where data usage is expected to be high in a limited portable and stationary environment where as 3G CDMA networks are ideally suited for geographically diverse voice and data coverage.

From the technical perspective, 1x EV-DO in its recently completed standard version 1x EV-DO REV A are extremely efficient systems, delivering a compelling user experience to a multitude of users and only 1.25 Megahertz a spectrum.

In addition, the narrow 60 1x EV-DO handsets that have been commercially introduced with networks in Korea, Japan, North and South America.

Future deployments in other parts of the world are setting the stage for even greater volume advantages.

Furthermore, 1x EV-DO leverages large volumes of components in both devices and infrastructure from CDMA2000 and also provides transport compatibility to CDMA2000 1x systems making its deployment extremely cost effective and compelling.

Next question is can you give an update on India and also speak about the status of 2.1 megahertz licenses in China.

I'll begin with India.

Prepaid was slow to roll out and higher entry costs were limiting the addressable market.

However, we did learn today that Reliance cut the price in half for the LG and Nokia handsets to match the current pricing of the Motorola handset.

We view this as a positive move and one that should help pick up new subscribers.

Reliance also introduced several new data capable hand sets.

In the press article issued today, where the Reliance president of wireless products and services was quoted as saying, their prepaid is the only prepaid service in the country that delivers superior proposition compared to any service provide in terms of flexibility, wide range of data, enabled handsets, as well as the widest range of pricing points.

This, our latest initiative, will further ease entry level barriers in the prepaid segment as well.

CDMA operators in India do need additional spectrum in order to meet the tremendous demand for wireless services, as well as to satisfy the quality of service expectations and roll out high -- new high speed data services.

Despite migration to the unified license in India, the spectrum allocation guidelines for CDMA operators have not been changed to be in line with the GSM operators yet.

China is very important to us and will be a much larger addressable market when the MII grants additional wireless licenses, which we think will be late this year or early next year.

This will expand the market to probably four operators and further develop the Chinese manufacturing base for devices.

We remain comfortable with our 14 million CDMA handset estimate for China in calendar 2004.

Our calendar 2004 estimates, handset estimate for India is now 10 million, so slightly down from what we had before.

Next question is what has been the reason for the recent resurgence in the South Korean market?

There are a number of factors and influences that have strengthened the Korean market.

Korean manufacturers have designed a compelling and successful handset model for both the domestic and international markets.

These feature rich handset models are driving strong handset exports into markets like North America.

Record increases in handset sales, including DO, are replacement rates and the introduction of number portability have led the way to strong growth with the highest monthly net additions the region has seen in two years with the domestic market.

CDMA subscribers in South Korea have surpassed 35 million and reports indicate there are over 6 million 1x EV-DO subscribers in the region, enjoying full featured data services, including video on demand and multi media e mail.

Next question regarding Japan, the Japan market has been exciting this year .

Can you discuss updates in the region and also give an update on DoCoMo intention with 3G PP compliant WCDMA?

I'll begin with KDDI and their recent success.

Leveraging 1x EV-DO networks, KDDI has established itself as the leader in that position six months in a row.

By offering creative data applications, and superior voice service.

KDDI is now offering three 1x EV-DO handsets and one 1x EV-DO data card as part of their 1x Wind service.

KDDI had over 476,000 net subscribers as of March, which was up from 274,000 in February.

DoCoMo experienced over 720,000 additions to its 3G former network in March, bringing the total number of former subscribers to over 3 million.

DoCoMo added 413,000 net subscriber additions in March with PDC declining an increase over 84,000 in February, so the Japan market is doing very well.

We obviously look forward to DoCoMo's migration to 3G PP compliant WCDMA that will enable manufacturers using QUALCOMM chips the opportunity to win business with DoCoMo.

We anticipate this process will be complete in approximately one year based on public comments by DoCoMo.

It is important to remember that results from handset sales of WCDMA through Vodafone and Foma through DoCoMo are reflected in the QTLs results.

I will now turn the call over to Paul Jacobs for the QTL and QUALCOMM wireless and internet update.

Thanks, Tony and good afternoon everybody.

My first question, can you expand on opportunities for MediaFLO?

In my opinion, multimedia delivery to handsets will be the next driver of data revenues for carriers.

A significant amount of money being spent globally on ring tones is an earlier indicator of this trend.

The opportunity with MediaFLO is to deliver a fully integrated multimedia experience using the capabilities of both latest networks using the newest ear interfaces such as 1x EV-DO and DO Gold, using the chipset features Sanjay will discuss and our license fees, color screen handsets with Megabytes of on-board memory using the extensibility of the group platform.

And we're not making a choice here about which video compression schemes are going to be dominant.

MediaFLO provides a plug in architecture to support the choices of the operator or content provider.

In providing compelling video and audio in a simple and unified user interface is core to the offering.

But the viewing experience can be augmented because the handset is always with you.

With MediaFLO, content can be tagged so that your phone can alert you when something you're interested in is being shown.

For example, a commentary on a stock in your portfolio or a significant event for your favorite sports team.

The phone can beep and you will immediately see what just happened.

In addition, BREW applications can be be intermixed with multimedia to allow consumers to find out more about the new video they just viewed or purchase the latest product they just saw on the mobile shopping channel.

These are some of the compelling experiences that will drive multimedia usage.

We believe that MediaFLO offers tremendous advantages for all of our partners across the value chain.

Content providers are able to leverage their brand and content into the wireless space, reaching millions of wireless viewers worldwide.

Because MediaFLO is designed to deliver subscription services like cable TV, the business model for the content providers is very well known to them per subscriber, per month.

MediaFLO also allows the aggregation of content into basic premium spheres creating a critical mass of content that will increase subscription rate.

Handset providers also have a lot to gain.

MediaFLO leverages are a successful group platform which means that the integration and testing will be straightforward and time to market for the solution will be short.

MediaFLO will drive the need for higher end handsets with advanced displays and increased audio capabilities and compelling video services like MediaFLO also serve to drive sell through in the retail channel.

If anyone has ever used a TV, they will know how to use MediaFLO.

We see MediaFLO providing tremendous value for operators who are looking to deploy high speed wireless data networks in consumer services and solutions needed to build a positive return on investments on their network investments.

We recognize that the cost per bit delivered to the handset needs to be driven down in order to deliver rich multimedia content at prices consumers are willing to pay.

We enable this with MediaFLO by scheduling off peak delivery of non realtime content.

As operators with commercial multimedia services look to migrate their network from point to point to multitask systems, such as 1x EV-DO Gold multitask MediaFLO lowers cost even further by allowing one transmission of content to be received by multiple handsets.

Next question, can you discuss the momentum in BREW?

BREW continues to grow worldwide.

BREW Solutions has recently achieved record milestones.

In the March quarter there were nearly 5 million new BREW subscribers and in just a little more than two years users have securely downloaded more than 100 million BREW-based applications.

This is undeniable proof of the success that operators here in the U.S. and around the world are having with their BREW services.

Verizon wireless announced in late January that Get It Now downloads increased to 5 million downloads per month and they reported that approximately one-fifth of their customers now have colored handsets and more than 50% have 1x enabled handsets.

It's important to point out that the hundred million download milestone confirms that there are many happy BREW publishers and developers who are producing great content and in return realizing great revenues.

The latest BREW update data as of April is as follows, more than 21 million handsets in the market, more than 120 commercial BREW handset models and 24 commercial device manufacturers, and 26 commercial operators in 19 countries.

We just announced that Tata Teleservices plans, in India, plans to launch BREW applications and services, in Mexico we just signed a definitive agreement with Iuseacell (ph) to deploy downloadable wireless applications and services based on BREW.

We've had a lot of activity in the global market.

And in Europe, we hosted our inaugural BREW developers conference which attracted more than 125 applications publishers and developers as well as European operators and device manufacturers to learn more about the benefits of QUALCOMM's BREW offering of products and services.

With the BREW HI embedded in our chipset, European operators and their suppliers are being introduced to the values of the BREW client.

We have several key employees from the BREW business on assignment in Europe where they are working to secure the first operator's with BREW service.

Next question, what should we think of longer-term for the QIS business?

In March we announced a new QPoint offering which leverages the power of the BREW platform and GPS1 hybrid assisted GPS wireless location technology for mobile phones.

This unique combination provides the most complete end to end mass market location based services solutions available today.

QPoint is commercially available around the world and there are more than 25 million GPS1 enabled handsets in the market today.

There are 15 wireless operators that have deployed the QPoint solution for the purposes of offering commercial or e-911 services.

There's been a lot of attention focused on push-to-chat solutions in the market recently and we are well positioned to take advantage of this.

Recently we hosted the first public demonstration of the QChat solution over 1x EV-DO which features a call set up latency of less than one second.

Tata Teleservices in India will offer push-to-chat services via QUALCOMM's BREWChat solution on (INAUDIBLE) CDMA2000 1x.

BREW chat client is a BREW application that may be downloaded using the BREW distribution system, with push-to-chat functionality moving to the application layer, push-to-chat services will now be able to interact with other applications.

As an example someone could use their wireless device to capture video while on the push-to-chat session with multiple participants and the group would all have the experience as if they were looking through the view finder of the camera.

LG Electronics announced plans to develop a variety of BREWChat enabled handsets that will be available to operators in different regions around the world.

Next question, how should we think of QWVS going forward and are there new initiatives underway?

We continuously look for new revenue opportunities in QWVS that allow us to leverage the value of our technology, our messaging hub and our market position.

In March, we commercially launched or Omni 1 mobile communications system with our first customer, CH Robinson Worldwide Incorporated one of North America's largest third party logistics companies.

Omni 1 is a low cost transportation application for mobile phones that runs on QUALCOMM's BREW solution and it provides suites of all sizes of portable communications tool that enables drivers and dispatchers to receive and send assignments, as updates and other information.

This past quarter we also launched our professional services organization, which will offer application installation, systems integration, testing, training, project management services, existing QUALCOMM truck load and decide what (INAUDIBLE) customers in maximizing their investment.

The cardionet mobile cardiac monitoring service which is enabled with QUALCOMM CDMA technology and our wireless networking services, continues to exceed our growth expectations.

Our globalTRACS equipment management system is making further inroads into the construction equipment market as evidenced with new customers such as Zachry Construction Corporation and Red Mountain Machinery.

We've also created an advisory council to further the development of QUALCOMM's untethered trailer asset management system for the transportation and logistics interest industry to the solution of choice for Schneider National Incorporated.

In addition, we continue on our work to make OmniTRAC the defacto standard for munitions and Hazmat tracking.

With increased sales in Europe and Brazil, the results in (INAUDIBLE) continue to be strong and we believe that (INAUDIBLE) has many opportunities to become a higher grossing business..

Now I'll turn the call over to Sanjay Jha for the QCT overview.

Thank you, Paul and good afternoon, everyone.

Let me take a moment to review the overall state of our business.

Demand for QCT chips is unprecedented and we continue to see very strong demand across our full product offering, covering CDMA2000 1x, 1x EV-DO and wide band CM.

To date, approximately 150 devices are in design or have already come to market based on our 6,000 savings and solutions.

During the March quarter, QCT shipped 32 million chipsets for handsets and other devices compared to approximately 32 million units in the first quarter of fiscal 2004 and approximately 28 million units in the second quarter of fiscal 2003.

We are winning customers for our low CM products, specifically the 6025 CDMA2000 1x chipset.

Many of our most established customers are using this device to build handsets for emerging markets.

Our RFC Moss program supporting the 6025 is in fact ahead of schedule.

The firsthand set based on 5100 chip sets have arrived.

This CDMA 2000 1x chipset represents the most integrated multimedia platform we have delivered to date.

We continue to grow our customer base, provide them CDMA the largest base of manufacturers working for a single chipset provider.

We have extended our leads today with 21 signed OEM partners, QUALCOMM has by far the largest customer base of any provider of wide band CDMA chips for wireless devices.

In addition to our close working relationship with Vodafone operators around the globe, our engagement with other wide band CDMA operators in Europe is expanding.

As additional customers sign up for our product line, this is leading to more formative discussions with operators about choice of OEM suppliers, handset performance specifications and detailed log schedules.

During the March quarter, we announced the 6225 chipset, our newest wide band CDMA solution to support dedicated data services and lower tier volume centric handsets. 1x EV-DO growth continues and the breadth of growth has a strong demand from Korea and KDDI's launch of DO.

We are very satisfied with the progress our customers are making as they migrate from 5500 to 6500 chipset and expect to see a variety of new devices based on the 6500 available this year.

During the March quarter, we announced a number of important related initiatives to enable our customers to deliver new multimedia devices, including an agreement with Real network to enable the delivery of real audio, real video content and wireless devices.

Our joint -- our joining forces with ATI Technologies provide a fully integrated wireless 3D gaming platform.

The integration of H.264 Video Codec Chipset solution for higher quality video streaming at lower bit rate.

Added synthetic music mobile application format or SMAF to our library of audio file formats to provide better choice for our customers.

And the integration of FX 4AC and ASE plus into our QTV and CMS multimedia solution to provide high fidelity audio at a very low bit rate.

In addition, our fully integrated video platform has received very strong market acceptance.

Over 30 separate phone designs are already commercially available supporting video recording, play back, and video conferencing, using our MSM 6000 series chipset.

During the March quarter we continued to see strong demand from our infrastructure customers.

We shipped CSM infrastructure chips supporting a record 5.7 million equivalent voice channel for 3D CDMA2000 1x and 1x EV-DO base stations.

Looking forward, in the June quarter, we expect to ship between 33 and 35 million MSM chips.

And now I'd like to address some anticipated questions.

The first question is, how are we addressing this demand?

To satisfy what we expect to see, continuing strong demand for our solutions we've been making extra effort and working with our suppliers to increase capacity and are extending on all of our horizons.

We're also investigating additional sources of capacity.

We continue to partner with our customers to help them migrate as quickly as possible to the newer 6000 CD solutions where we have additional capacity and have received a very positive response.

What pressures are we seeing on RSBs?

We continue to price our full product line to be competitive at every tier.

ASPs are decreasing well within anticipated ranges.

We anticipate future ASPs to be affected by a change in mix due to increasing traction for our lower tier chipset for such emerging markets as India, China, Latin America.

To some extent, this will be offset by adoption of higher feature products such as EV-DO and wide band CDMA.

What new progress is being made to drive R & D activities?

QUALCOMM is hiring.

Our engineering team continues to grow as our chipset line expands and with the various pricing new initiatives we are driving in multimedia.

In addition to our growth in San Diego, we have recently established new engineering facilities in Raleigh, North Carolina, India and Germany.

What specific efforts are being made to address current competitive challenges?

Our future success rests upon our ability to provide a competitive advantage for our customers.

There are many elements to this strategy but let me summarize what is most critical to our success.

First, our extensive segmented forest line is allowing us to grow the addressable market for our product.

There is no market segment that we do not service industry migrate to 3D wireless data.

Our customers continue to win business by being first to market with the greatest variety of compelling handsets.

Second, we intend to be competitive and maintain a leading position in all commercial versions of 3D technology.

As the globe completes its turn to 3G, we will drive aggressively to capture every market opportunity and drive the word to wireless data communications.

During the March quarter, new customers were announced for the 6100, 6250, 6300 chipset solutions, subbing 1x wide band CDMA and GSM 1 that's respectively.

All three of these platforms utilize essentially the same feature set, reducing the time and resources required for our customer utilizing two or more of these platforms to design and test new devices and bring them to the market.

Third, we are pushing to make wireless communications more ubiquitous by continuing to drive down the cost for both simple voice communications as well as more sophisticated devices.

We previously announced our plans to use cost effective CMOS profit technology for our chips.

During the March quarter we also announced plans to deliver this year our first in 92-nanometer low part consumption chipset solutions, a result of our close partnership with TSMC.

This initiative will improve cross set performance and enable the inclusion of more features into single chips, further enabling our integration strategy.

Now I'll turn the call over to Bill Keitel for the financial overview.

Thanks, Sanjay.

Good afternoon everyone.

We've completed another quarter with excellent financial results.

I'll begin with a brief review of QSI (LOST AUDIO) during the March quarter, we completed our exit from Vesper in Brazil.

We sold the company that owns Vesper (LOST AUDIO) licenses to the Brazilian regulator Anatel and the outstanding indebtedness associated with these licenses was cancelled.

Since we have ceased Vesper and Vesper-related operations in Brazil, we must present our prior Vesper business as a discontinued operation.

Prior period financial results now separately state income or loss and earnings per share for discontinued operations relating to Vesper.

Turning to our core business, which excludes QSI, revenues for the March quarter were 1.2 billion, earnings before tax were 625 (LOST AUDIO) or 53 cents.

We exceeded the high end of our prior earnings guidance by 3 cents per share for three primary reasons.

First, we sold more RF chips than expected due to short lead time orders we were able to fulfill.

Second, we reduced our fiscal (LOST AUDIO) third, we recorded approximately 7 million in interest that we expect to receive from the IRS for an income tax refund.

That will will be in the March quarter and it is not recurring in the future.

QCT, our chip business shipped 32 million MSM phone chips in the March quarter, matching their previous record set in the prior fiscal quarter and up 4 million from the year ago quarter.

QCT generated revenues of $711 million, down 5% sequentially and up 10% year-over-year.

QCT earnings before tax were $250 million, $258 million, excuse me, QCTs operating margin of 36% is up 1% sequentially and 2% year-over-year.

QUALCOMM wireless and internet reported revenue and earnings of 145 (LOST AUDIO) million in the March quarter respectively compared to 138 million and 6 million in the previous quarter.

QTF licensing business reported second fiscal quarter revenues of 390 million and a 93% operating margin.

Of the 390 million in revenue, 30 million represents intercompany royalties, 15 million represents license fees, and 345 million was royalties from the third party licensees.

Based on royalty reports from our licensees, worldwide CDMA handsets shipped in the December quarter were approximately (LOST AUDIO) above our expectation at the outset of the quarter of 32 million units.

We expect our licensees to report March shipments of approximately (LOST AUDIO) March royalty revenues from (LOST AUDIO) first 57 million is a difference between our accrual estimate of 205 million in the first fiscal quarter and actual 262 million reported by those licensees in the second fiscal quarter.

The second component is 51 million, representing royalties that we do not accrue, which were reported and recognized as revenue in March.

The last component is our estimate of 237 million, representing the portion of earned royalty that we can estimate for March.

The average selling price of CDMA handset was approximately $188 for the December quarter, a 3% sequential decline versus our expectation of approximately 2% decline.

Cash, cash equivalents and marketable securities totalled 6.6 billion at the end of December, an increase of 795 million for the quarter.

Free cash flow in the current quarter was 148% of GAAP net income and 59% of revenue.

These free cash flow metrics continue to set us apart from other companies in the semiconductor and wireless equipment sectors.

Looking ahead, we're increasing our guidance for revenue and earnings per share.

We now expect a larger CDMA market in 2004, flat average selling price of CDMA handsets, greater shipment of our (LOST AUDIO) slightly greater share of the CDMA2000 chipset market, a lower effective tax rate and less (LOST AUDIO).

I'll briefly address each of these points.

For the calendar 2004 CDMA market we now expect approximately 152 to 160 million CDMA handsets to be shipped, compared to our prior estimate of 138 to 146 million units.

Based upon the 156 million mid point of our increased estimate, calendar (LOST AUDIO) handsets shipments are anticipated to (INAUDIBLE) approximately 33% year-over-year.

We have increased our guidance for WCDMA by 2 million units as we see continued progress with existing WCDMA operators and progress toward planned new service launches notably in Europe.

We decreased our guidance (LOST AUDIO) for India by 3 million units due primarily to the slower start for prepaid programming.

South Korea has recently experienced record handset sales driven by number portability, portability, and compelling EV-DO handsets.

Also, we have seen strength in new CDMA subscribers (LOSt AUDIO) most prominently in North America, driven by number portability and new features, including camera phones.

As to the average selling price or ASP, of CDMA handsets,, we expect increasing sales of high-end CDMA and WCDMA handsets and an increasing penetration of color screens, cameras, extra memory, and other features into mid tier CDMA handsets to offset (LOST AUDIO) due to the growth in both the high and mid tier markets we now expect CDMA handset ASPs in fiscal 2004 to average approximately (LOST AUDIO) to approximately $194 ASP for fiscal 2003 and that compares also to our prior fiscal 2004 estimate of a 7% decline.

For the June quarter we expect to ship approximately 33 to 35 million MSM phone chips.

We anticipate June quarter revenues including QSI will increase sequentially by approximately 4 to 7% and 41 to 44% year-over-year.

We anticipate that earnings per share excluding QSI will be approximately (LOST AUDIO) fiscal 2004 we anticipate revenues excluding QSI (LOST AUDIO) to 29% over fiscal 2003.

How did that happen?

Is there -- we should probably move over this entire table.

What happens is we keep -- there's something going on with that speaker.

This mic over here?

Yeah.

Do you know where it cut out?

Ladies and gentlemen, today's conference has been slightly delayed due to technical difficulties.

We will resume momentarily.

We will now resume the conference.

Mr. Keitel, please go ahead.

All right.

I apologize to everyone on the line.

We somehow lost this connection.

I'm thinking next time we'll do this on CMA wireless.

I'm not sure where we lost -- where I lost you.

I'll back up briefly and I'll try and move ahead quickly though.

Looking ahead, we're increasing our guidance for revenue and earnings per share.

We now expect a larger CDMA market in 2004, flat average selling price of CDMA handsets, greater shipments of our MSM phone chips, slightly greater share of the CDMA2000 chipset market, a lower effective tax rate and less investment in QSI.

For the calendar 2004 CDMA market we now expect approximately 152 to 160 million CDMA handsets to be shipped, compared to our prior estimate of 138 to 146 million units.

Based upon the mid point of our new estimate this would represent approximately 33% year-over-year growth.

I would note that we have increased our guidance for WCDMA by 2 million units, as we see continued progress with existing operators and progress toward new service launches, notably in Europe.

I would also note we have decreased our guidance for India by 3 million units due primarily to the slower start for prepaid programs.

We have listed on our website the regional breakdown of our new estimate and we have noted on that website presentation the change by region for this new estimate.

As to the average selling price of CDMA handsets, we expect increasing sales of high-end CDMA and WCDMA handsets and an increasing penetration of color screens, cameras, memory, and other features into the mid tier CDMA hand sets, which we expect will offset the average selling price impact of the substantial and growing shipments of low-end CDMA handsets.

Due to the growth in both the high and mid tier markets we now expect CDMA handsets in fiscal 2004 to average approximately $194.

This compares to approximately $194 ASP for fiscal 2003 and compares also to our prior estimate for 2004 of a 7% decline.

For the June quarter, as Sanjay noted, we expect to ship approximately 33 to 35 million MSM phone chips.

We expect June quarter revenues excluding QSI to increase sequentially by approximately 4 to 7%, and 41 to 44% year-over-year.

We anticipate earnings per share excluding QSI will be approximately 48 to 50 cents in the June quarter, a sequential decline due primarily to an expected decrease in QTL revenue and QCT's operating margin percentage, which will more than offset the expected increase in QCT MSM shipment volumes.

For fiscal 2004, we anticipate revenues excluding QSI to increase approximately 26 to 29% over fiscal 2003.

We anticipate earnings per share excluding QSI will be in the range of $1.93 to $1.98, an increase of 36 to 39% year-over-year.

Our annual effective tax rate for fiscal 2004 is now estimated to be approximately 30% for both our core business and total QUALCOMM.

This a decrease from our prior estimate due to greater foreign earnings, taxed at a lower rate.

We continue to focus cautiously on making new QSI investments.

We now anticipate that monetization of existing QSI investments will exceed new investments by approximately $55 million in fiscal 2004.

I'll close my comments with a perspective on worldwide CDMA channel inventory.

We view this inventory channel as beginning with the shipment of a base band or MSM phone chip and ending when the manufactured handset is purchased by a consumer.

We believe this channel today has insufficient inventory.

Less than the 15 to 16 weeks that we estimate manufacturers, distributors and operators in total need.

We expect to channel the normalize over the next two quarters as supply and demand better align.

That completes our remarks.

Operator we're ready for questions.

Ladies and gentlemen, we will now begin the question-and-answer session.

To queues up for a question, press star, one.

To retract your question, press the pound key.

If you are using a speaker phone, please pick up your handset before pressing the numbers.

One moment please for the first question.

Brian Modoff , Deutsche Bank.

Please go ahead with your question.

Hi, guys, a couple of quick questions.

First, looking at the, your chipsets, Sanjay, are you looking at pricing, can you kind of talk about where you see the pricing trends in your chipset business for this year?

What percentage of your chipset volumes do you expect to be 6000 this year?

And then when are you planning to get the RFC Moss product into volume?

Thanks.

We had guided to some ASP decline this year and the ASP decline that we're seeing is well within the range that we had indicated, certainly as the RASP depends on the product mix and we have been very successful in competing now with GSM on the low end by driving the cost of CDMA handsets down, so that certainly puts some pressure on RASP.

On the other hand, some of that is compensated as a result of seeing 6100, 6250, 6300 and 6500 chipset being successful in the marketplace.

So overall we see some decline in ASP going forward.

On the 6000 series, we believe by the fourth quarter this year the majority of shipments from QCT will be 6000 series based shipments and that transition may happen a little sooner as a result of some shortage of chipsets that we've indicated in the MSM 5100 and 5500 our customers are very keen to migrate as quickly as possible.

In terms of RFC Moss, I think we had indicated that we will sample our -- provide sample to our customers in May.

In fact, we're ahead of schedule and we have provided -- we've already provided some samples to some of our customers.

So I believe those were the three questions, Brian.

When would you be in volume then in RFC Moss do you think?

We expect that our hand set will be available either in fourth quarter this year or first quarter next year.

And finally one last thing on your operating income on QCT, you've been definitely tracking in the mid 30s now for the last couple quarters.

Do you see that as sustainable?

We have guided you to an operating profit of 26% plus/minus 2 percent, I think.

Our guidance was previously was 26.

We updated that to 28 in January.

Brian, our guidance here is based on an operating margin in the 32% range for the full fiscal year.

Okay.

Thanks.

Tom Marsco (ph), Marsco Capital Management.

Please go ahead with your question.

Thank you.

Irwin, I had a question concerning Europe and when you might expect significant revenues from new products that you're offering in the WCDMA area from the new vendors that you spoke about in your prepared comments.

And how that business will develop over the next five years or so.

We do expect this year to begin to see some revenue on our chipset sales from new phones that will be sold.

But probably somewhat later in the year.

I think initially it will be from devices, plug in costs for computers, but then an increasing number of phones becoming available and being sold.

So fourth quarter calendar I suspect is when we will begin to see some interesting numbers.

But, I believe that will grow significantly next year '05 and then thereafter, assuming that the operators continue to build out their networks, fill in coverage, offer services and do so at exciting pricing.

I do think all of those will happen and so we do look forward to a transitioning of the 2G GSM over to 3G and for that to happen certainly starting next year and reasonable quantities and then ever increasing.

Is that process changing given the success that you've had in the United States and in Europe, or excuse me, and in Asia with the new products that the operators can provide and that would allow someone first to the market in Europe with those products maybe an advantage over existing service providers and that could potentially drive the volume at a rapid -- more rapid rate?

Yes, I think that that indeed is the case that manufacturers that have experience with the CDMA2000 1x/1x EV-DO high speed data capabilities can indeed build very full featured phones for WCDMA and moreover, we also see that the price of those phones will come down rapidly.

There's very little cost delters (ph) using our chips building the WCDMA phones.

So we'll see tiering of those phones as well.

We are certainly working with the various manufacturers to make that happen.

Finally, a number of the services that have proven to be quite attractive to subscribers, we think will also be attractive independent of their interface and therefore be available to operators in Europe.

One one additional answer to that is 6100, 6250 and 6500 both support the same ATI and application development environment so those customers of ours who have already developed 6100 and 6500 based hand sets will be able to offer those applications for UMTS which is 6250, much more readily and therefore get to market faster.

So could you potentially see 20 or 25% of your business coming from Europe in five years?

It is certainly quite a range in our estimates at this point so I think we're going to have to wait to see how fast that transitioning occurs.

As you know, we've set a target of roughly 50% of the WCDMA marketplace and it then depends on how fast WCDMA builds up.

We have a lot of work to do though.

Tim Luke from Lehman Brothers.

Please go ahead with your question.

Thanks and congratulations on the quarter.

I was wondering, you talked about your efforts to expand capacity.

Could you give us some color on how that's going, what you've done to alleviate the capacity issues and I think especially in the past you talked about examining investments and fully depreciated fabs to expand capacity.

We have today sufficient capacity in .13 micron and 6000 series, so one thing we're doing is to migrate more of our customers faster, helping them migrate faster from 5000 to 6000 series.

Secondly, we've been able to secure as a result of our long-standing relationships with the suppliers increased wafer allocation and new wafer start.

So a combination of those two things, certainly enables us to better meet our customer's requirements in the second half of this year.

In terms of investments, we're very, very keen to make investments in fully depreciated quarter micron, .18 micron fabs, both for RFC Moss, as well as for our training edge technology product so that we can deliver low cost solutions to our voice centric customers in Latin America, in India and southeast Asia.

Hasan Imam from Thomas Weisel Partners.

Please go ahead with your question.

Yeah.

Thank you.

A couple of questions.

First of all, Irwin, the view on the WCDMA market, if you look at the experience in Japan, it's taken about three years to ramp to critical mass, what are you seeing differently at the European areas that gives you more comfort that they'll hit critical mass probably almost as fast as the first year of serious launches?

One of the problems that I think DoCoMo confronted was that they did not build out across the whole country for their former product and that it was not a standard product initially.

They're now converting, of course, over to a standard product.

In Europe, I think that the build out of bay stations has been relatively extensive.

There's been more of a wait now for the handsets to become available and that the handsets will operate on 2G as well as 3G, so some of the problems that were encountered with Fullmer won't be present.

Fullmer also had the problem that the handsets were larger, heavier and used much more power than the handsets that consumers were already used to.

That was partly because they did not have fully integrated chips to work with.

The manufacturer using our chipsets will have fully integrated chips to work with and I think therefore won't have those same kind of difficulties.

So again, I suspect it's going to depend on again the introduction of good handsets and I suspect that will be happening this year.

Secondly, very good and increasing coverage so that you don't have to fall back on 2G too often and thirdly, then good pricing and good service offerings.

I think that some of the key European operators are very focused on having all of these circumstances occur and that they can build their business.

So I am confident that over the next few years we will see a significant transition from selling 2G products to selling 3G products in Europe.

Edward Snyder from Charter Equity Research.

Please go ahead with your question.

Thanks.

Obviously you're on allocation and a lot of your chips give you capacity issues here, and typically when this occurs OEMs often double order or will get orders in earlier.

How confident are you that the backlog that you're seeing in chips now doesn't include a lot of over ordering and how much has your backlog grown faster than your revenue at this point?

Certainly -- it is certainly true that when people are on allocation they double order, not least so they can make the argument that their order is so large and therefore their allocation ought to be larger.

We work very closely as a result of this allocation process, we've begun much more closely with operators and we have little greater visibility now into the downstream supply chain and as a result of that, we believe -- we believe that we are well positioned to not fall in the trap of building very large inventory.

On the other hand after just having gone through a phase of allocation, we are very much biased towards building some inventory if necessary so that we can -- we never again get in a situation where we have to put our customers in allocation situation.

So I think that's clearly a two-edged sword and we work very closely with operators as well as some distributors and our OEMs to understand their requirement so that we manage the supply chain as efficiently as possible.

Christin Armacost from SG Capital.

Please go ahead with your question.

Thank you.

A question about China.

You maintain your outlook for this year in terms of China, yet the first couple of months have been a run rate significantly below.

Do you anticipate that China Unicom may introduce, reintroduce subsidies towards the end of the year to help reaccelerate the CDMA sub ads?

Christin, we certainly have seen in past years the same kind of calendar distribution with lower shipments in the early part of the year and rising in the later part of the year.

So I think that's part of the answer.

At the same time, Unicom continues to improve their data offerings, they're looking at introducing the multi mode handsets in the middle of the year, so I think that they have a lot of new offerings and so they don't have to subsidize phones particularly to drive the volumes we were talking about, which are still I think, you know, 14 million relatively modest.

Wojtek Uzdelewicz from Bear Sterns, please go ahead with your question.

Tax rate, can you give us a sense of what that tax rate is going to be on a forward basis?

I might have missed the earlier comments.

Also, in -- what would be the reason for the lower tax rate?

The second question I had, you mentioned, gave us a number of 3 G -- I mean UMTS handsets that were shipped -- users 4 million.

What would be your estimate currently that you have your market share in among those users or how many chipsets did you ship?

Sure on the forward tax rate, we now expect the tax rate to be approximately 30% for fiscal 2004.

Our prior estimate was approximately 31%.

I'm speaking to the core business.

The reason for that decrease is this we now see more of our earnings being off shore, foreign earnings, and the tax rate on those earnings is less than what it is in, domestically here in the states.

Sanjay do you want to talk about share of WCDMA or?

Right now, a majority -- a significant portion of the shipment in wide band CDMA is being done by DoCoMo, which as Irwin was indicating earlier is at least initially was not a UMTS compliant system.

So we didn't have an opportunity to address that marketplace, so as we begin to work with DoCoMo and as they begin to migrate towards fully compliant 3G PTUMTS network, we are very hopeful that next year we will begin to address that marketplace also.

The second place where there is shipment of wide band CDMA handset is at Hutchinson and where none of our suppliers today are providing handsets to Hutchinson.

So those two marketplace excluded, majority of the hand shipments are in data cards and some small amount of shipments of handsets and we believe we have a good market share in those markets but the shipment there is small.

So as of right now, I believe in the markets that we address, there is small shipment but our market share is good and more importantly, we are very well positioned with the carriers like MM O2, like Orange, like Vodafone, like T Mobile as they begin to launch networks and ship they've selected some of the customers who have used our chipset.

So we are hopeful that we will have reasonable market share going forward but because of dominance of shipment by DoCoMo and Hutchinson today, our market share is not large.

Mike Walkley with RBC Capital.

Please go ahead with your question.

Great, thanks.

Just touching on the Opex do we still think about greater than 20% growth in Opex year-over-year and then within R&D, just some of the initiatives you're investing in, can you maybe give us an update on potential timing on some of the new exciting areas, like EV-DB and HSDPA?

On the operating expense, yes, we are still tracking to a rapid growth in both R&D and SG&A, primarily R&D, much more growth in R & D than in SG&A and previously I had said more than 20%.

The guidance that I had given you here is more in the range of a 25% year-over-year grow.

The bulk of our R&D expenditure this year and the growth this year is in QCT, so, Sanjay maybe you want to talk a little bit about HSDPA or other new initiatives.

Certainly.

We have indicated that we will sample in the fourth quarter this year, MSM 5275 which will be the world's first fully integrated HSDPA device.

It will have significantly enhanced multimedia capability so we are on track for that sample.

EV-DO revision A we will sample in first quarter '05 and EV-DV, MSM and CSM we will sample in fourth quarter this year.

Though I think we have indicated before, we believe that commercial deployment of EV-DO revision A may actually be sooner than EV-DV because of the complexity of system verification and deployment associated with the brand new system like EV-DV as opposed to a minor variation of the already commercially deployed system like DV-DO.

One other place that we are investing significant number of resources is our multimedia capabilities and ability to provide a computing platform, which will deliver sufficient computing power to support the new applications as they become necessary, as bigger and (INAUDIBLE) of data is available to handsets and devices and we believe we will be able to deliver a Gigahertz processor in 2005.

We believe well deliver fully integrated multimedia capability that supports EGA resolution at 30 frames per second, both encode and decode, again, next year so all of that we're investing significant dollars in.

Additionally, we want to migrate all of our RF chipsets to RFC Moss as quickly as possible and we're putting a significant amount of resources there as well.

So those are some the key areas that we're putting resources in.

RFC Moss as I indicated earlier we have already sampled to some customers, but we're going to migrate every single RF device that we have to RFC Moss as soon as possible thereafter.

We're also, as I mentioned earlier, investing quite a bit on enhancing various capability with 1x EV-DVO, similarly the multimedia delivery capabilities and supporting a whole range of applications, more efficient delivery, I think some very consumer friendly areas, so that is a key aspect.

We also are very focused on the transitioning now of voice from a circuit delivered capability to a packet that is VOIP.

I think we will be growing significantly over the next few years. 1x EV-DO is a very efficient platform for delivering packets.

We think it will turn out to be very useful for voice now as well.

John Bucher with Harris Nesbitt.

Please go ahead with your question.

For Sanjay or Irwin.

Sanjay mentioned that EV-DO REVA equipment subscriber and there was equipment could come in before ED-VD.

Just wondering when do you think we might see the first commercial network and subscriber equipment being available for EV-DO REVA?

That's a little hard to say because that does involve the various infrastructure manufacturers getting the upgrades on the software.

Having said that, I think there's a great interest in moving to REVA as quickly as possible by all of the operators that are now putting DO in place.

And so there's pressures on the operators to do so.

So by 2006 I think we will be seeing significant build ups on REVA and possibly some initial uses earlier.

Certainly in terms of self station modem chips, we will sample our highly integrated CSM 6800 in fourth quarter this year and the MSM in first quarter next year, so we will support a deployment though we recognize that there are lots of other components and players who have to develop their solutions before it can be deployed.

Louis Gerhardy from Morgan Stanley.

Please go ahead with your question.

Good afternoon.

Got a quick one.

For Sanjay, one for Bill, and then Irwin.

First on the QCT side, you had a big CSM quarter.

Can you just talk about what you might expect for June and then for Bill, was your Opex guidance about 25% year-over-year was that just for the fiscal third quarter or for the year?

Can you also give us some tax guidance for fiscal '05 and then finally for Dr. Jacobs, if you could just talk about the 2.3 Gigahertz activities in Korea, should we think of that as more of a risk or an opportunity for QUALCOMM?

Thank you.

On the CSM, previous quarter, the December quarter, we had I think indicated that we shipped 4.6 million.

This quarter we have shipped 5.7 million equipment voice channel.

We expect that in June quarter we'll come somewhere in between those two.

On the, Louis, on the tax rate, so again 30% this year, I think that the best view at this time is that our foreign earnings will continue to increase relative to our domestic earnings and so I do expect improvements in the tax rate into '05 and '06.

You know, in the range of a point or so each year.

On the Opex what I spoke to there was the 25% range was the full fiscal year 2004 relative to 2003.

For the June quarter, Opex in the range of about a 5 to 6% growth sequentially is what I'm expecting.

With respect to the Korean 2.3 Gigahertz spectrum and others looking at 2.3, clearly there's a variety of technologies being looked at for that spectrum.

We ourselves are also working significantly there.

However, I think you will see that, for example in Korea, that DO will continue to expand, that the video services will be taking an increasing amount of capacity and that we will be introducing new capability to augment that in the existing spectrum.

There will be some satellite possibilities for also providing such delivery, and then as you look at the 2.3, one can either as needed up band to 2.3 using existing technologies or possibly introduce the new ones and that's going to be something of an economic trade off and also something to do with government policy.

But it's going to be interesting to see as one begins to get more and more data usage in the available spectrum, then what the best move is to new spectrum.

Korea by the way, of course, is also very heavily wired so they have a lot of the internet delivery over DSL.

Where it -- what the economic need for the different technology at 2.3, that's yet to be proven.

Very similarly to the case where they made a decision to go to WCDMA but now there's very little really demand for that at this point.

Our final question comes from Bill Benton with William Blair.

Please go ahead with your question.

Good afternoon.

Just an FYI to you Bill, we started losing you right at the beginning, I think when you starting going through your three points, but that's just an FYI.

On the handset ASPs, is there one particular significant reason for the reversal on there?

I know you obviously expect constant ASPs.

Was there one reason that was more important than the others in terms of that positive reversal?

And then just a question on the -- I guess success kind of breeds lawsuits and I didn't know if you could comment at all with regard to the Maxim lawsuit?

Okay.

First on the ASP, the change in guidance there is of course we got another full report from our licensees and I think the foremost element there is just we think we're seeing a higher proportion of camera phones, higher proportion of color screens, extra memory, second processors that is holding these ASPs up, even though the low end continues to go lower.

And then as well, you know, we did increase a bit here our estimate for WCDMA and as well, you've seen us increase our regional forecast for Asia and we've talked about how well both Korea and Japan are going.

So those are all factors contributing to the ASP.

Okay.

Steve ultimately on the Maxim lawsuit, there's really not a whole lot that I can add that isn't already publicly available.

But this is an action where we believe that Maxim's RF chips are infringeing upon our patent and, you know, recently I think you saw some anti-trust claims that Maxim basically they were counterclaims to our action that, you know, we will obviously vigorously defend but it's a -- it's litigation that I think is kind of in the natural course of things that we continue not only in the CDMA area but outside of just specifically CDMA we continue to file lots of patents and we expect that those patents should be honored.

This does conclude the Q and A session for this call.

Dr. Jacobs, do you have any closing remarks?

Yes, thank you all for attending.

I'm sorry that we had that technical glitch in there.

Clearly it wasn't as Bill noted it wasn't on CDMA wireless.

It has been a very exciting quarter.

I think though the excitement is building as we look forward right now, we do have to deal with working our way through the shortage of supply of chips.

We think the demand indeed is there and we want to be able to support our manufacturers and their customers very well.

So we've got our work cut out going forward.

The excitement of new technologies, the introduction of WCDMA of many new applications.

I think is going to continue to drive wireless for several years yet to come.

So hopefully we'll have some more exciting quarters to report in the future.

Thank you again very much.