Mahalla and Adr

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  • Topic: Qualcomm, Wireless, Broadcom
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Qualcomm/Atheros Deal Close – Messaging/Q&AMay 24, 2011|

Key Messages|

Our comprehensive industry-leading connectivity and networking portfolio will help accelerate the expansion of Qualcomm’s presence in existing businesses and provide access to significant new business opportunities with additional products and channels. The unparalleled combination of our technologies will provide rich and complete platforms that enable Qualcomm’s customers to deliver more compelling user experiences, accelerate time-to-market and expand their footprint.

Market expansion beyond mobile:
Atheros’ complementary product portfolio, sales channels, and leadership in the networking, computing and CE segments provides an opportunity for Qualcomm to expand beyond its core mobile business into new business opportunities with additional products and channels, representing an incremental and growing global TAM.

Brings two global leaders together:
This acquisition combines the technology strength and leadership of Qualcomm in mobile platforms and WAN technology, with the technology strength and leadership of Atheros in LAN connectivity.

Commitment to innovation (Team strength and culture fit):
Qualcomm and Atheros share engineering-focused cultures with demonstrated execution capabilities and proven track records in developing technologies that help our customers deliver the most compelling products and user experiences.

Global scale and reach:
Qualcomm and Atheros have complementary customer relationships around the world, with particular strength in high-growth businesses. This enables Qualcomm to leverage the engineering expertise and investments of both companies across expanding businesses. Leveraging the combined scale of two fabless semiconductor leaders will increase our ability to deliver high-performance products quickly, at high volume, and at great value.

Rich customer solutions:
Our complementary strengths will allow the combined company to provide unparalleled benefits to our customers, in terms of breadth of offering, differentiation, customer support, integration, performance, and value.

Customer focus:
Qualcomm and Atheros both focus on making their customers successful. This customer focus will continue to be at the center of all activities at the two companies, including product planning, sales, technical support and co-marketing.

Key Takeaways|

* Financial Implications
* Accounting is not yet finalized;
* On a Non-GAAP basis we estimate that the acquisition will be modestly dilutive to earnings per share in fiscal 2011 and modestly accretive in fiscal 2012, consistent with our previous forecasts.  * In addition, based on preliminary estimates, we expect the transaction to be further dilutive to GAAP earnings by approximately $0.09 to $0.13 per share for the remainder of fiscal 2011 driven primarily by certain near-term purchase accounting charges and secondarily by ongoing share-based compensation expense. * These near-term purchase accounting charges result from the requirement in ASC 805 to record acquired inventory and backlog at fair value at the time of acquisition, which will result in reduced margin contribution as inventory and backlog as of the acquisition date are converted to revenues over the remainder of fiscal 2011.

* Reporting of Qualcomm Atheros results:
* Will be reported as part of the QCT Segment
* We have a long history of providing useful information to investors and will continue to follow this philosophy. We aren’t making specific disclosures in this regard at this time. * Funded primarily with onshore cash

* As we had previously mentioned, we have been evaluating the use of offshore and onshore cash for the transaction.  Based on further analysis and an evaluation of the complexity and potential costs of using offshore cash, we decided that it is optimal for QC to use...
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