Qualcomm Inc.: Chips Get Smarter

Aug. 25, 2009
Company looks to rebound from slower sales with entry into 'smartbooks' market

Qualcomm Inc. CEO Paul Jacobs recently told Bloomberg News the makers of a new small computer known as "smartbooks" will use his company's Snapdragon chip for the new device that's expected to start selling in the next quarter.

Acer Inc., Samsung Electronics Co. and LG Electronics Inc. are among 15 computer manufacturers that plan to sell a computer that will work like a wireless handheld device, such as a BlackBerry, but resemble small laptops with keyboards and daylong battery life, Bloomberg reported on Aug. 24. Other smartbooks features include instant access with no boot-up time or waiting time for e-mail downloads, a built-in GPS and mobile broadband speeds.

Qualcomm is trying to boost sales after third-quarter revenue fell to $2.75 billion from $2.76 billion during the year-earlier period, the company reported on July 22. Qualcomm projects fourth-quarter revenue of $2.55 billion to $2.75 billion, a 17% to 23% decrease from the same period last year. The midpoint $2.65 billion is well below analysts' average estimate of $2.72 billion, according to Reuters Estimates. Third-quarter profit fell 1.5% to $737 million, or 44 cents per share.

Analysts expect sales to fall 6% this year, which would be the company's first decline since 2001, according to Bloomberg.

Qualcomm made several announcements in early June regarding enhancements to the Snapdragon processor aimed at improving smartbooks performance. Sun Microsystems Inc. partnered with Qualcomm to release Java Platform Standard Edition 6 for Snapdragon-powered smartbooks. The companies say the new Java version will operate 32 times faster than earlier implementations on netbook systems.

The company said on June 1 it was working with several software developers to write applications for devices based on its Snapdragon chipsets. The company has enlisted the services of Zinio for digital media services; RealNetworks Inc., Bluestreak and Varia Mobile for multimedia player capabilities; Phoenix Technologies, ThunderSoft and Xandros for operating systems; Haansoft and Remoba for productivity applications; Conveneer for social networking applications; and Bsquare and Movial for system integration services.

Qualcomm Inc.
At A Glance

Qualcomm Inc.
San Diego, Calif.
Primary Industry: Communications Equipment
Number of Employees: 15,400
2008 In Review
Revenue: $11.14 billion
Profit Margin: 28.36%
Sales Turnover: 0.45
Inventory Turnover: 6.90
Revenue Growth: 25.60%
Return On Assets: 17.09%
Return On Equity: 19.96%
Qualcomm also said it was expanding the Snapdragon platform with a next-generation chipset that uses 45 nanometer (nm) process technology to "provide faster processing, significant battery life improvements and other enhancements for the user experience on Snapdragon-powered smartphones and smartbooks."

The new chipset is scheduled for sampling before the end of the year, the company said in a June 1 statement. The 45nm technology will provide a 1.3 GHz processor that will improve performance by 30%, along with enhanced multimedia and 2-D and 3-D graphics, which is expected to improve the performance of Adobe Flash software.

"The latest addition to the growing family of Snapdragon chipsets will help our customers to develop faster, more power-efficient smartphones and smartbooks," said Luis Pineda, senior vice president of marketing and product management at Qualcomm CMDA Technologies, in the June 1 statement.

Analysts view Qualcomm's move into the computer market as a head-to-head battle with Intel, which typically dominates the field, Bloomberg News reported. But Jacobs doesn't see it that way.

He characterizes the smartbooks as mobile devices and the Intel-powered netbooks as low-cost computers.

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About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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