Qualcomm moves to exit Vesper

Qualcomm Inc., announced Wednesday, April 23, in San Diego that the company is ?disappointed by the Brazilian regulator?s denial of Vesper?s request to provide full mobility service? and has therefore ?initiated efforts to exit? its investment in the Brazilian competitive local exchange carrier. Anatel recently turned down Vesper?s request to provide mobile service in the 1900 MHz frequency band. Dr. Irwin Mark Jacobs, chairman and CEO of Qualcomm, told Wall Street analysts that Qualcomm?s revenues were 1 billion US Dollars in the second quarter of fiscal 2003 (January-March), for a year-over-year increase of 50%. Net income was 103m USD, for earnings per share of 13 cents, compared with 44m USD or 5 cents per share a year earlier. This figure for second-quarter net income includes 160m USD in asset impairment charges related to Vesper. Net income excluding the Qualcomm Strategic Initiatives segment (QSI), of which Vesper is part, was 314m USD or 38 cents per share.
In his allusion to Anatel, Dr Jacobs said Qualcomm believed Vesper?s request ?was in accordance with the previous regulation and one which would have greatly benefited subscribers in Brazil.? As a result of the denial, ?we have initiated efforts to exit our Vesper investment and realize the maximum value possible from its assets.?
?During the March quarter, we exceeded our earnings target,? Dr Jacobs said, attributing this performance to the launch of new CDMA2000 1x networks and substantial increases in subscriber revenues for operators using what he called the highest-speed commercial data technology (1xEV-DO). Several new 1xEV-DO networks will be launched in the coming months with new applications and services, he said, highlighting Vivo, the Telefonica Moviles/Portugal Telecom joint venture in Brazil.

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The statement also said QSI revenues, ?primarily related to the consolidation of the Vesper Companies, were $26 million in the second fiscal quarter, down 10 percent sequentially… This includes Vesper-related losses of $188 million, which consist primarily of $160 million of asset impairment charges and $22 million of losses from operations?. According to Qualcomm ?the impairment loss recognized is the difference between the carrying values of Vesper?s long-lived assets and their estimated fair market values?.

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