Qualcomm May Change Accounting,Shares Off
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Qualcomm Inc. QCOM.O, a maker of  chips used in mobile phones, on Friday said it may change the  way it recognizes royalties from licensees, which would reduce  fourth-quarter pretax income by $298 million.
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Investor's Business Daily - Thanks to earlier reports of a strong cell phone market, it didn't surprise many analysts that Qualcomm, a leading cell phone company, on Friday boosted its earnings guidance.
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Wireless technology company Qualcomm Inc.  on Wednesday posted quarterly earnings that rose 46 percent on strong sales of cell phones using its chips, but it said current-quarter earnings would fall short of the average Wall Street forecast.
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(InfoWorld) - The U.S. International Trade Commission said that QualcommÂ is infringing on one of Broadcom's patents, dealing a blow to Qualcomm in anÂ ongoing patent battleÂ between the companies. The Commission hasn't yet issued a penalty for the infringement and Qualcomm pledged to appeal the decision. The companies are in the midst of many other lawsuits with each other regarding cell phone patents. Broadcom said the Commission could bar Qualcomm from importing its chips to the U.S., forbid Qualcomm from selling the infringing products in the U.S., and even ban the import of phones containing the chips. But Qualcomm says that the Administrative Law Judge, who made the initial ruling that was upheld by the Commission, has recommended against barring the import of phones that use the chips. The Commission made its ruling on Friday and both Qualcomm and Broadcom released statements on Monday. The Commission will issue its remedy decision by Feb. 9. Qualcomm has downplayed the importance of the technology in question, saying it is based on software and not fundamental to CDMA (Code Division Multiple Access), the mobile technology that Qualcomm created and is best known for. Qualcomm has said previously that it is exploring ways to work around the technology. The two companies have several other outstanding cases against each other. One is set to be tried in March, another in May, and a third doesn't yet have a trial date set. Broadcom is also appealing an antitrust suit that it filed against Qualcomm which has been dismissed. Broadcom is also one of five technology companies that filedÂ anticompetitive complaints against QualcommÂ with the European Commission. Â
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Lower sales, bigger losses, and a sneaky-looking accounting change mean investors should watch their wallets.
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The mixed results in its latest earnings report may get lost in the wording.
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Amid further delays of AMD&#39;s quad-core server chip and plans to write off goodwill from the acquisition of ATI, AMD executives are going to face tough questions when they meet financial analysts in New York Thursday.AMD preempted the analyst meeting with the announcement Wednesday that it plans to take a material charge for impaired goodwill from its US$5.4 billion acquisition of graphics chip maker ATI. But AMD didn&#39;t say how big that charge will be, promising to announce the amount within four days -- a span of time that implies details of the charge will be revealed after the analyst meeting.Goodwill is a financial term that describes the difference between the price that one company paid to acquire another and the net value of the assets that it acquires. This difference, or goodwill, reflects the intangibles that a company acquires, such as the reputation and intellectual property of the acquired company.AMD initially recorded goodwill of $3.22 billion from the acquisition of ATI. That was reduced to $3.17 billion at the end of September, primarily due to changes in income-tax liabilities recorded by the company. AMD&#39;s decision to write off a significant portion of this goodwill is a recognition that ATI is no longer worth the price it paid last year.The expected charge further dims AMD&#39;s gloomy financial outlook. The company has so far lost $1.6 billion this year on sales of $4.2 billion. By comparison, AMD recorded a $410 million profit on sales of $3.9 billion during the first nine months of 2006. At the same time, AMD borrowed heavily this year to keep its operations moving, issuing $3.7 billion in notes that are convertible into company shares.AMD received a further boost last month with a $608 million investment from a company owned by the Abu Dhabi government, but the company still faces significant challenges.Those challenges are reflected in the decline of AMD&#39;s gross margin since last year, partly as a result of the ATI acquisition, which brought lower-margin products into AMD&#39;s lineup, but also because server chips represented a lower percentage of the company&#39;s microprocessor sales. Server chips are generally more expensive and have higher margins than processors used in desktops and notebooks, and strong sales of server chips would give a badly needed boost to AMD&#39;s financial situation.The problem is that AMD&#39;s latest server chip, the Quad-Core Opteron formerly known as&#160;Barecelona has been repeatedly delayed,&#160;giving rival Intel an opening to expand sales of its own server chips at AMD&#39;s expense.After recently discovering&#160;a bug in the Quad-Core Opteron that stopped shipments of the chip, AMD now expects the processor, launched in September, to finally ship in large volumes sometime during the first quarter of 2008. That means the Quad-Core Opteron might not be available to most customers until March, six months after its launch and more than one year after the first pre-production samples of the chip were made available to server makers.While analysts will be looking for more detailed guidance on when AMD expects to ship Quad-Core Opteron chips in volume, they will also be looking for information on the next version of the Quad-Core Opteron, called Shanghai. AMD promised to ship Shanghai during the middle of 2008, but the company has yet to produce working samples of the chip.&quot;We will have initial samples also in January. I&#39;m fairly confident that those puppies are going to boot, and then we can have a follow-up conference call and I&#39;ll tell you, &#39;The sucker is booting,&#39;&quot; said Mario Rivas, the executive vice president of AMD&#39;s Computing Products Group, responding to a question about Shanghai during a recent interview with CRN.Whether that means AMD will release Shanghai in mid-2008 as promised remains to be seen.Shanghai is a 45-nanometer &quot;shrink&quot; of the problematic Barcelona chip, which is produced using a 65-nanometer process. These numbers represent the average size of the smallest feature that can be created on a chip, and smaller is generally considered better.Moving to a more advanced production process offers chip makers several benefits, such as reducing unit production costs by making the chip smaller or adding more features, such as additional on-chip cache. But the move to a more advanced process also carries risks, such as the possibility of lower production yields that can result in limited availability or chips that run at lower clock speeds than expected.Along with these issues looming over AMD, there are questions about the future of Hector Ruiz, the company&#39;s CEO and chairman. As head of the company, Ruiz ultimately bears responsibility for the company&#39;s recent performance problems and the impending write down of goodwill from the ATI acquisition. For months, there has been speculation within the industry that Ruiz would be forced to step down from his current position.However, that&#39;s unlikely to happen, according to a Reuters report citing comments made by Ruiz in a television interview to be aired by CNBC Europe later today. During that interview, Ruiz named AMD President and COO Dirk Meyer as his successor, but scotched speculation he plans to step down next year, the report said.
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Wireless chip supplier Qualcomm Inc   said on Wednesday it would be hurt in the short term  by a court injunction on the sale of chips infringing rival  Broadcom Corp's  patents, but it promised to have  alternative products in phones before the end of the quarter.
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Investor's Business Daily - When it comes to making CDMA chips for cell phones, Qualcomm is king. But as a new generation of phones hits the market, the company may struggle to keep its reign.
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Qualcomm Inc. may change the way it recognizes royalties from its licensees, which would reduce fourth-quarter pre-tax income by $298 million, the company said on Friday.
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U.S. shares are set for a softer start on  Thursday with tech stocks again under pressure after  weaker-than-expected results from online auctioneer eBay  EBAY.O and a soft outlook from wireless firm Qualcomm  QCOM.O overnight.
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By The Orange County Register, Calif.  Dec. 19--Chipmaker Broadcom Corp. said it canceled more than $37 million  in stock options for three former employees after finding that they adjusted  the dates of the options to maximize their value.
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Qualcomm and Broadcom have settled some of their patent claims against each other, avoiding a jury trial scheduled to begin next month, Qualcomm said on Friday. They remainÂ deadlocked over other patents, however, and still face several potential trials this year.
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Former Qwest Communications chief executive Joseph Nacchio reportedly may soon face civil charges related to improper accounting at the telecommunications company.
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Microchip maker Broadcom Corp.   BRCM.O said on Friday it found more discrepancies in the   dates of past stock-option grants, and expects to record   additional expenses at least double its previous estimate.
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Microchip maker Broadcom Corp.   on Friday said an internal review had uncovered  discrepancies in its accounting for stock options grants and  that it would restate earnings as far back as 2000.
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Shares in US phone giant AT&T leap after reports that one of its spin-offs is preparing to take it over.