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Qualcomm CEO Paul Jacobs on the company’s outlook and factors driving the company’s success.
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Week -- it's quickly becoming a wireless world you know that you can do almost anything.
With nothing but a Smartphone or tablet.
Nowhere is this more evident than Qualcomm its fourth quarter earnings -- reported higher than expected numbers after the bell today.
And I spoke with the chairman and CEO Paul Jacobs asked him really at what is at the heart of driving his company's success.
In the first happening this year there were over 300 million Smartphones -- that's up 45%.
Year over year.
That drove our licensing business because it drove average selling price is up around the world.
Drove our chipset business because now everybody wants the latest and greatest technology which is.
Three G and forging multi mode chips and we -- of our latest star newest ship the snapdragon.
We sold triple the number in -- last quarter than we had in the previous quarter as we look forward.
We're talking about increasing those numbers another 32 million chip sets in the quarter sought to 173.
Million chip sets.
At the midpoint shipped in that quarter that we're in right now so Smartphones are really driving the business very strongly.
I'd like we've just -- Smartphones driving the numbers so then my question becomes of course we have seen how the PC numbers.
Of adoption of come down that definitely slowed.
If there's a choice of people we have a certain amount of money and they're going to choose between buying the -- -- Smartphone or tablet what are they choosing Paul.
So right now there's no question that Smartphones far far out salt tablets but.
We're very excited about the tablet business it's continuing to grow obviously we've seen some excellent success with.
Apple on the iPad and now you're starting to see.
Other players come in you see the Google tablets coming up.
Obviously Amazon's.
You know really driving that as well a lot of players are coming in and then Microsoft just launched windows RT which is full windows.
On a mobile chipset on our snapdragon chipset so there's a lot of competition a lot of innovation that's coming in that space for -- that's gonna excite consumers as well.
And I think people will have multiple device and and they already do but I think that's going to be even bigger trend going forward well.
You know what I know you don't get into specific names but it everybody knows -- in the apple food chain near in the Samsung galaxy food chain in the in some way shape or form the iPhone has been obviously huge but when we talk to analysts some of them say.
Qualcomm is so strong in those higher and names but yet we're seeing elsewhere around the world the proliferation of sort of the lower end phones.
That may be poorer nations people are using to adopt.
Do you have an exposure there because analysts are saying they're they're too exposed to the higher and names and not enough on the lower end.
While I would say the the market -- become a little bit like a -- -- there's a lot at the top and there's a lot of the bottom in the middle is getting squeezed.
-- -- very very focused on the bottom as well put a lot of R&D end of that.
We have a program called Qualcomm reference designs -- we actually give these smaller manufacturers.
A complete design that they can then modified slightly.
And we have already over a hundred devices in that market we got a -- chips that are coming out Quad Core chips even down in that low end of the market.
It's a battle there's obviously very good you know lot of price sensitivity -- price competition down there.
But because we're the biggest -- was company mean that we by the most ships out of manufacturing plants.
That means that we can't get the best price and we can have our costs very good and we can drive really hard down that low into the market.
We're very focused on that I think that's going to be a great growth opportunity.
About half or maybe even 60% of of Smartphones sales.
Are going to come out of emerging markets so you gotta be focused on that hundred dollar and below Smartphone market and we are.
Okay that's that is something that I definitely wanted to hear -- that I know analysts wanted to hear of the cherry on top of all of your number at information here today was that you raised your outlook for next year.
What will be the propellant behind that guidance poll especially when.
We still have trouble in Europe you -- all kinds of consumer -- via corporate space have all -- trouble in Europe hurt our North Face name.
Everywhere across the -- anything that can be purchased is is very tentative in Europe.
A slight slowdown in China I know you saw some positive -- -- in China but one will propel your numbers in 2013.
-- M and it's the same thing it's Smartphones are growing globally we are cautious about the macro -- economic situation room.
We're building our guidance off of about a 3% global GDP which is below consensus.
Because we think things might soft little bit more.
You look at our guidance on device shipments we actually took our numbers down in developed markets and up in emerging markets so it's a lot of strength.
In the emerging markets and I think that's going to continue to to go forward.
We look at things like sensitivity of the fiscal -- if we fall off that and in the worst case who's maybe another point of global GDP.
We still think that will have good growth.
Because of Smartphone isn't a luxury item now it really is -- thing that people need to get online.
Even in developing countries.
-- you brought up of the the debt situation and and what's happening.
In the wake of our election.
Obviously everybody is talking now about the fiscal cliff and you were one of the CEOs who signed the campaign to fix the debt.
Secure one of those Smart guys you know Ph.D.s.
Entrepreneur or.
Tell us what is the number one saying this country needs to do to fix the debt right now.
You know we're looking at things like.
Corporate tax reform we'd like to see that happen -- -- it seems crazy that we have so much money offshore.
That can't be brought back to put to work in the United States.
You know things like that and we really looked in the fix the -- campaign.
At the Simpson Bowles proposals as a good framework to start from so.
Look at solving some of these fundamental issues.
And also I would I would say you know we're very focused on the application of mobile technology -- things like healthcare and it really is disturbing the most the health care debate is about.
Taking benefits away from people when it really should be about.
Let's make this system more efficient we know that was mobile technology over the next five to ten years we are gonna see great efficiencies com.
What's figure a way out -- way to accelerate getting efficiency in the health care system so we can solve that problem as well.
Politic --
