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QUALCOMM Announces Third Quarter Results Pro Forma Earnings Per Share $.27; Record Pro Forma Net Income Up 40 Percent from Third Quarter of Fiscal 1999.

Business Editors

SAN DIEGO--(BUSINESS WIRE)--July 19, 2000

QUALCOMM Incorporated (NASDAQ: QCOM) today reported pro forma revenues (see note below) of $714 million for the third quarter of fiscal 2000, an increase of 11 percent compared to $645 million in the year ago period. Pro forma earnings per share were $.27 in the third quarter of fiscal 2000 compared to $.22 per share in the third quarter of fiscal 1999, an increase of 23 percent. Pro forma earnings before taxes were $352 million, a 47 percent increase, compared to $239 million in the third quarter of fiscal 1999. Pro forma net income was $218 million, an increase of 40 percent, compared to $156 million in the third quarter of fiscal 1999.

For the first nine months of fiscal 2000, pro forma earnings per share were $.80, pro forma earnings before taxes were $1 billion, and pro forma net income was $635 million. This represents an increase of 45 percent in pro forma earnings per share, 80 percent increase in pro forma earnings before taxes and 72 percent increase in pro forma net income, compared to the first nine months of fiscal 1999.

Note: Pro forma results for the current period exclude $64 million in ongoing amortization of acquisition-related goodwill and other intangible assets and $7 million in employer payroll taxes on employee non-qualified stock option exercises. Pro forma results for the prior year period exclude the results of exited businesses and related charges, one-time gains and other non-recurring items. Pro forma earnings exclude the above mentioned items and, therefore, differ from reported earnings which are presented in accordance with generally accepted accounting principles.

"Our profitability continued to improve with an increase of 23 percent earnings per share over the third quarter of last fiscal year and a record $1 billion in pro forma earnings before taxes for the first nine months of fiscal 2000," said Dr. Irwin M. Jacobs, chairman and CEO of QUALCOMM Incorporated. "Our chip business met its third quarter goal of shipping a record number of MSM phone chips, while aggressively preparing for and investing in new areas of growth including third generation (cdma2000 and WCDMA) and HDR products. Our technology licensing business signed numerous license agreements during the quarter and we're seeing momentum build in requests for both new license agreements and 3G extensions by existing licensees. We're particularly excited about supporting a new group of licensees - companies that are focused on creating wireless data devices and applications to maximize the inherent benefits of CDMA and enable wireless Internet access."

Pro forma operating expenses (research and development and selling, general and administrative) for the third quarter of fiscal 2000 increased to 21 percent of revenues, compared to 19 percent of revenues during the year ago period. The increase in research and development expenses were primarily associated with new product initiatives including HDR development (now being standardized under the name 1xEV), software applications that run on QUALCOMM phone chips and an enhanced position location technology embedded in QUALCOMM chipsets.

The Company currently estimates its pro forma annual effective income tax rate to be 38 percent for fiscal 2000, compared to 35 percent for fiscal 1999.

Reported revenues for the third quarter of fiscal 2000 were $714 million, compared to $1 billion in the year ago period. The decrease in reported revenues was attributable to the sale of the subscriber business in February of 2000. Reported earnings per share were $.19 in the third quarter of fiscal 2000, compared to $.09 per share in the year ago period. Reported earnings before taxes and net income were $281 million and $155 million in the third quarter of fiscal 2000 compared to $91 million and $59 million, respectively, in the year ago period.

Cash Flow

QUALCOMM's cash, cash equivalents and investments totaled approximately $2.3 billion at the end of the third quarter of fiscal 2000. The following table presents selected cash flow information for the third quarter of fiscal 2000 (in millions):


Selected Cash Flow Information Amount

Earnings before taxes, depreciation,
 amortization and non-cash charges $ 367
Working capital changes (72)
Additional share capital 23
 -----
Net cash inflows 318
 -----
Strategic investments and capital expenditures (263)
 -----
Net cash generated $ 55
 =====

 Pro Forma Results of Business Segments

 The following tables present pro forma segment information for the
third quarter of fiscal 2000 and 1999 (in thousands):

 Third Quarter - Fiscal Year 2000


 Reconciling Total
Segments QCT QTL QWS Items (1) QUALCOMM

Revenues 338,132 174,245 167,184 33,960 713,521
Change from
 prior year 6% 38% (12%) N/M 11%
Earnings
 before taxes 109,573 152,384 65,129 24,653 351,739
% of revenues 32% 87% 39% N/M 49%
Change from
 prior year (15%) 35% 73% N/M 47%


 Third Quarter - Fiscal Year 1999


 Reconciling Total
Segments QCT QTL QWS (2) Items (1) QUALCOMM

Revenues 318,324 126,019 190,464 9,882 644,689
Earnings
 before taxes 129,496 112,820 37,640 (40,461) 239,495
% of revenues 41% 90% 20% N/M 37%


(1) Reconciling Items related to revenues consist primarily of other

non-reportable segment revenue less inter-segment eliminations.

Reconciling Items related to earnings before taxes consist

primarily of non-reportable segment results, unallocated net

investment income, distributions on Trust Convertible Preferred

Securities (FY99 only), and the elimination of inter-company

segment profit.

(2) QWS segment information for the third quarter of fiscal 1999

excludes $38 million in revenues and $30 million in losses before

taxes related to the Company's terrestrial CDMA wireless

infrastructure business sold to Ericsson in May 1999.

N/M - Not Meaningful

Highlights of Business Segments - Third Quarter Fiscal 2000

QUALCOMM CDMA Technologies (QCT)

-- Shipped approximately 15 million Mobile Station Modem (MSM)

phone chips to customers worldwide during the third quarter of

fiscal 2000, compared to approximately 11 million MSM units

shipped during the same period last year.

-- According to the Company's most recent royalty reports, QCT's

share of the CDMA chip market has increased.

-- Recorded a book-to-bill ratio of less than one at the end of

the third quarter of fiscal 2000, due to decreased domestic

phone sales in South Korea resulting from the elimination of

phone subsidies in June 2000.

-- Increased research and development on chipset functionality,

product initiatives and software, as well as new HDR products.

These investments resulted in earnings before taxes as a

percentage of revenues of 32 percent compared to 41 percent in

the year ago quarter.

-- Achieved a major milestone with cumulative shipments of more

than 100 million MSM chipsets and system software to customers

worldwide.

-- Announced strong worldwide support from fifteen handset

manufacturers for the Company's third generation (3G) cdma2000

1x MSM5000 chipset and system software solution.

-- Commenced U.S. trials of 3G cdma2000 1x voice and data

capabilities, including the verification of the 144 kilobits

per second (kbps) data rate using QUALCOMM's MSM5000 chipset

and system software and CSM5000 base station chip and system

software.

QUALCOMM Technology Licensing (QTL)

-- Reported license, development and royalty fees totaled $174

million, up 38 percent in the third quarter of 2000, compared

to $126 million for the same period a year ago. License,

development and royalty fees from third parties were $159

million in the third quarter of fiscal 2000.

-- Entered into several multi-million dollar, royalty-bearing

subscriber and modem equipment license agreements including

Cherish Telecom Co., Ltd., First International Computer, Inc.,

GARMIN Corporation, Novatel Wireless Inc. and Photojet.

-- Announced a multi-million dollar expansion of the Sierra

Wireless, Inc. license agreement from modem cards only to

include complete subscriber units.

QUALCOMM Wireless Systems (QWS)

-- Shipped 31 thousand Globalstar phones in the third quarter of

fiscal 2000, for a cumulative total of over 71 thousand

Globalstar phone shipments since production began in September

of 1999.

-- Announced an agreement with In-Flight Network LLC and

Globalstar to develop low-cost broadband Internet, e-mail,

paging, and voice-over-IP applications for commercial airline

fleets and their passengers.

-- Shipped approximately 14 thousand OmniTRACS units and related

products in the third quarter of fiscal 2000 compared to

approximately 12 thousand units during the year ago quarter,

for a cumulative total of over 350,000 units.

-- Commenced beta testing of CDMA-based OmniExpress and GSM-based

LinQ. OmniExpress will provide a terrestrial based fleet

management solution for the U.S. market and LinQ will serve

the European market.

-- Signed a joint marketing and technical support agreement with

Descartes Systems Group, which will allow routing and other

software products to interface with OmniTRACS and OmniExpress.

-- Completed the delivery and commercial sale of a full Network

Operations Center to QUALCOMM's Chinese partner SST. OmniTRACS

production units are now operational in China.

Other Developments

-- Received a $125 million "Auction Discount Voucher" (ADV) from

the Federal Communications Commission (FCC) for use in any FCC

spectrum auction, for one or more licenses over a period of up

to three years. The Company is currently exploring

opportunities to participate in these auctions on its own or

through a partnership or consortium with other parties or to

sell the ADV to a third party.

-- Announced a joint venture with Technicolor Digital Cinema,

Inc., which will provide open, end-to-end distribution

technology and support services for the delivery of digital

cinema to theaters worldwide.

-- Exceeded 1 million downloads of Eudora 4.3 and 700 thousand

active users for Eudora 4.3 in Sponsored mode; surpassed the

200 million impressions-delivered to Eudora customers; and

Eudora was voted "Best Email Software" from PC World in its

"Best Products of 2000" picks.

QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's major businesses include CDMA integrated circuits and system software solutions for wireless voice and data communications products and services; technology licensing; and satellite-based systems including OmniTRACS(R) and portions of the Globalstar(TM) system. Headquartered in San Diego, Calif., QUALCOMM is included in the S&P 500 Index and is a 1999 FORTUNE 500(R) company traded on the NASDAQ under the ticker symbol QCOM.

Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks associated with component shortages; risks associated with chip inventory and order levels; risks associated with the Company's ability to execute additional 3G licenses; risks associated with the ability to sustain or improve operational efficiency and profitability; risks relating to the success of the Globalstar business; risks that the rate of growth in the CDMA subscriber population will decrease; risks associated with strategic investments, acquisitions or divestitures the Company may pursue; risks associated with the scale-up, acceptance and operations of CDMA systems, including HDR technology; risks associated with the development, deployment, and commercial acceptance of evolving CDMA technology standards; risks associated with developments in current or future litigation; risks associated with customer receivables and performance guarantees; risks associated with timing and receipt of license fees and royalties; and risks associated with international business activities, as well as the other risks detailed from time to time in the Company's SEC reports.

QUALCOMM, OmniTRACS and Eudora are registered trademarks of QUALCOMM Incorporated. MSM, CSM, iMSM and TruckMAIL are trademarks of QUALCOMM Incorporated. Globalstar is a trademark of Loral QUALCOMM Satellite Services, Incorporated. All other trademarks are the property of their respective manufacturers.


 QUALCOMM Incorporated
 PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share data)
 (Unaudited)

 Three Months Ended


 June 25, June 25, June 27,
 2000 2000 1999 %
 Reported Adjustment Pro Forma Pro Forma Change


Revenues $ 713,521 $ -- $ 713,521 $ 644,689 11%
 --------- --------- --------- --------- ----

Operating
 expenses:
 Cost of
 revenues 274,952 (2,477) 272,475 282,247 (3%)
 Research
 and development 80,933 (2,909) 78,024 58,944 32%
 Selling,
 general and
 administrative 76,696 (1,573) 75,123 61,095 23%
 Amortization of
 goodwill
 and other
 acquisition-
 related
 intangible
 assets 63,506 (63,506) -- --
 ------- --------- --------- --------- -----
Total operating
 expenses 496,087 (70,465) 425,622 402,286 6%
 ------- --------- --------- --------- -----

Operating income 217,434 70,465 287,899 242,403 19%

Interest expense (608) -- (608) (1,844) (67%)
Investment
 income, net 64,448 -- 64,448 8,630 647%
Distributions on
 Trust Convertible
 Preferred
 Securities
 of subsidiary
 trust -- -- -- (9,694) (100%)
 --------- --------- --------- --------- -----
Income before
 income taxes 281,274 70,465 351,739 239,495 47%
Income tax expense (126,573) (7,088) (133,661) (83,823) 59%
 --------- --------- --------- --------- -----
 --------- --------- --------- --------- -----
Net income $ 154,701 $ 63,377 $ 218,078 $ 155,672 40%
 ========= ========= ========= ========= =====

Net earnings per
 common share:
 Basic $ 0.21
 ========
 ========
 Diluted $ 0.19 $ 0.27 $ 0.22 23%
 ======== ====== ======
Shares used
 in per share
 calculations:
 Basic 741,735
 ========
 ========
 Diluted 805,507 805,507 751,532
 ======== ======= =======


 QUALCOMM Incorporated
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share data)
 (Unaudited)
 ASSETS
 June 25, September 26,
 2000 1999
 -------- ------------
Current assets:
 Cash and cash equivalents $ 712,709 $ 660,016
 Marketable securities 849,882 954,415
 Accounts receivable, net 672,649 883,640
 Finance receivables 54,167 26,377
 Inventories, net 73,949 257,941
 Other current assets 253,087 195,849
 ----------- -----------
 Total current assets 2,616,443 2,978,238
Property, plant and equipment, net 437,631 555,991
Marketable securities 705,771 70,495
Finance receivables, net 784,066 548,482
Goodwill, net 883,197 1,833
Deferred income taxes 515,855 123,788
Other assets 428,632 256,123
 ----------- -----------
 ----------- -----------
 Total assets $ 6,371,595 $ 4,534,950
 =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable and
 accrued liabilities $ 432,697 $ 708,307
 Unearned revenue 83,919 56,070
 Bank lines of credit -- 112,000
 ----------- -----------
 Total current liabilities 516,616 876,377
Other liabilities 35,082 75,667
 ----------- -----------
 Total liabilities 551,698 952,044
 ----------- -----------


Minority interest in
 consolidated subsidiaries 46,354 51,596
 ----------- -----------

Company-obligated mandatorily
 redeemable Trust
 Convertible Preferred
 Securities of a subsidiary trust
 holding solely debt securities
 of the Company -- 659,555
 ----------- -----------

Stockholders' equity:
 Preferred stock, $0.0001
 par value -- --
 Common stock, $0.0001
 par value 74 65
 Paid-in capital 5,080,375 2,587,899
 Retained earnings 732,415 200,879
 Accumulated other
 comprehensive (loss) income (39,321) 82,912
 ----------- -----------
 ----------- -----------
 Total stockholders' equity 5,773,543 2,871,755
 ----------- -----------
 Total liabilities and
 stockholders' equity $ 6,371,595 $ 4,534,950
 =========== ===========

Restated September 26, 1999 Stockholders' Equity for stock split on
December 30, 1999.

 QUALCOMM Incorporated
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share data)
 (Unaudited)

 Three Months Ended Nine Months Ended
 June 25, June 27, June 25, June 27,
 2000 1999 2000 1999

Revenues $ 713,521 $ 1,004,066 $ 2,561,335 $ 2,877,684
 ----------- ----------- ----------- -----------

Operating expenses:
 Cost of revenues 274,952 597,667 1,274,096 1,863,832
 Research and
 development 80,933 93,719 254,490 296,653
 Selling, general
 and administrative 76,696 104,808 275,870 329,762
 Amortization of
 goodwill and other
 acquisition-related
 intangible assets 63,506 148 84,114 752
 Purchased
 in-process
 technology -- -- 60,030 --
 Other -- 109,345 63,589 205,169
 ----------- ----------- ----------- -----------
Total
 operating expenses 496,087 905,687 2,012,189 2,696,168
 ----------- ----------- ----------- -----------

Operating income 217,434 98,379 549,146 181,516

Interest expense (608) (2,704) (4,494) (11,478)
Investment
 income, net 64,448 4,708 434,444 8,595
Distributions on
 Trust Convertible
 Preferred
 Securities
 of subsidiary
 trust -- (9,694) (13,039) (29,397)
Other -- -- (3,265) (52,531)
 ----------- ----------- ----------- -----------
Income before
 income taxes 281,274 90,689 962,792 96,705
Income tax expense (126,573) (31,741) (431,256) (31,847)
 ----------- ----------- ----------- -----------
 ----------- ----------- ----------- -----------
Net income $ 154,701 $ 58,948 $ 531,536 $ 64,858
 =========== =========== =========== ===========

Net earnings per
 common share:
 Basic $ 0.21 $ 0.10 $ 0.75 $ 0.11
 =========== =========== =========== ===========
 ----------- ----------- ----------- -----------
 Diluted $ 0.19 $ 0.09 $ 0.67 $ 0.11
 =========== =========== =========== ===========
Shares used in
 per share
 calculations:
 Basic 741,735 601,159 707,713 581,798
 =========== =========== =========== ===========
 Diluted 805,507 751,532 799,241 617,023
 =========== =========== =========== ===========
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