Analyst: Victor Sula, Ph.D. Initial Report

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

12/29/08

QCOM daily

44 42 40 38 36 34 32 30 28 volume

Š BigCharts.com

60 40 20

Tel: (858) 587-1121 Website: www.qualcomm.com

Millions

QUALCOMM Incorporated 5775 Morehouse Drive San Diego, CA 92121 USA

0

Oct

Nov

Dec

MARKET DATA

Share Statistics

NASDAQ

FY2007

FY2008

%Chg

Revenues, $ Mn.

8,871

11,142

25.6%

(12/23/08) Symbol

QCOM

Current Price

$34.16

Low/ High 52 weeks

$28.16 - 56.88

Operating margin

32.5%

33.5%

1.0 b.p.

Average Volume (3m)

19,772,020

Net margin

37.2%

28.4%

8.8 b.p.

Market Capitalization

$56.58 Bn

Shares Outstanding

1,655 Mn

1.95

1.90

-2.6%

EPS, $

Source: Yahoo Finance!, SEC Filings; year-ending September, 28.

Background Qualcomm Inc. (QCOM) is a wireless telecommunications research and development company which designs, manufactures and markets digital wireless telecommunications products and services based on its code division multiple access (CDMA) technology and other technologies. The Company also licenses and receives royalty payments on its CDMA technology from more than 155 major domestic and international telecommunications equipment manufacturers and suppliers worldwide.

The Company operates in four segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); Qualcomm Wireless & Internet (QWI); and Qualcomm Strategic Initiatives (QSI). QCT is a developer and supplier of CDMA-based integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system products, used in wireless devices, including mobile phones, data cards and infrastructure equipment. QTL grants licenses to QUALCOMM Incorporated (NASDAQ: QCOM)

1

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

use portions of its intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. QWI segment sells equipment, software and provides services to wireless operators in delivering multimedia content. QSI manages its strategic investment activities to promote the worldwide adoption of CDMA-based products and services.

The Company’s products are sold through direct sales force, partnerships and distributors in the United States, Europe, the Middle East, Argentina, Brazil, Canada, China, Japan, South Korea, Mexico and other foreign countries. The Company is included in the S&P 100 Index, the S&P 500 Index and is a 2008 FORTUNE 500® company.

QCOM was named one of the Best Companies to Work For by Fortune magazine for 10 years in a row. Qualcomm was founded in 1985 and is based in San Diego, California.

Highlights A solid record of innovation in communications technologies QCOM is a leader in developing innovative digital wireless communications products and services. The Company has research and development centers in various locations throughout the world that support its global development activities and ongoing efforts to advance CDMA and a broad range of other technologies. QCOM has an impressive intellectual property portfolio of approximately 8,900 United States patent applications, of which approximately 2,900 patents have been issued. Internationally, these numbers rise to 44,000 foreign patent applications, of which approximately 14,300 patents have been issued. The new technologies, applications and services are licensed across the wireless industry to help grow the wireless telecommunications market. The research and development expenditures in fiscal, 2006, 2007 and 2008 totaled approximately $1.5 billion, $1.8 billion and $2.3 billion, respectively.

Wide 3G WCDMA technology adoption The Company develops and commercializes the newest 3G CDMA-based technologies, such as CDMA2000 1X, 1xEV-DO, EV-DO Revision A, EV-DO Revision B, WCDMA, HSDPA, HSUPA, HSPA+ and other standards.

These technologies support more efficient voice communications, broadband access to the Internet, multimedia services, VoIP and other delay sensitive applications, including video telephony, push-to-talk and multiplayer gaming. More than 30 device manufacturers have selected QCOM’s WCDMA products that support GSM/GPRS, WCDMA, HSDPA and HSUPA for their devices. The Company also continues to develop 3G CDMA chipsets based on Orthogonal Frequency Division Multiplexing Access (OFDMA) technology to enable the next level of mobile broadband data services.

WCDMA has almost 70% share of commercial 3G networks in 101 countries and the total number of WCDMA (UMTS) subscribers is expected grow from 340 million at the end of 2008 to more than 2.2 billion by the beginning of 2013.

Significant revenues with a solid pace of growth QCOM derives revenue principally from sales of integrated circuit products, royalties and license fees for its intellectual property to manufacturers of wireless products. The Company’s total revenues for fiscal 2008 were $11.14 billion, compared to $8.87 billion for fiscal 2007 or a 26% increase year-over-year. The main driver of the Company’s revenues is the QCT segment which reported approximately 336 million Mobile Station Modem QUALCOMM Incorporated (NASDAQ: QCOM)

2

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

(MSM) integrated circuits sold during fiscal 2008, compared to approximately 253 million for fiscal 2007. QCT revenues comprised 59%, 58% and 58% of total consolidated revenues in 2008, 2007 and 2006, respectively.

Revenue, $ Mn

Source: SEC filings; fiscal year-ending September, 28.

Going forward, the Company is anticipating slower demand and rising inventory because of the economic downturn, and for the fiscal year 2009 QCOM expects revenue between $10.2 billion and $10.8 billion.

A slight decrease in margins Operating and Net Margins, %

2009

Source: SEC filings;

QUALCOMM Incorporated (NASDAQ: QCOM)

3

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

During the last couple of years, there is seen a decrease in margins due to increases in research and development and selling, general and administrative expenses, as well as increases in legal expenses. The decrease was partially offset by an increase in the Qualcomm CDMA Technologies segment gross margin percentage.

New 15 years license and settlement agreements with Nokia Corporation In July 2008, QCOM entered into new license and settlement agreements with Nokia Corporation that cover GSM/GPRS/EDGE, CDMA2000, WCDMA (including HSPA), TD-SCDMA, OFDMA (including LTE, UMB and WiMax) and other products and resolve all pending litigation between the parties. Under the terms of the agreement, Nokia has been granted a license under all QCOM’s patents for use in its mobile devices and Nokia Siemens Networks infrastructure equipment. Consideration provided to the Company under the new license agreement with Nokia included, among other things, a non-refundable up-front payment of $2.5 billion, ongoing royalties and the assignment of patents that QCOM recorded in intangible assets in the amount of $1.8 billion. Before the dispute, Nokia was QCOM’s largest customer, but Nokia has since created new chip partnerships with STMicroelectronics and Broadcom.

Strong balance sheet and operating cash flow QCOM has very strong cash reserves and marketable securities and does not have any long-term debt on its balance sheet. Cash, cash equivalents and marketable securities were $11.3 billion at September 28, 2008. Total cash provided by operating activities was $3.6 billion during 2008. However, unprecedented daily market volatility in the financial markets increase the risk of substantial fluctuations in the Company’s cash reserves.

Selected balance sheet data, $ Bn 28-Sep-07 Total Assets, including Cash and marketable securities Liabilities, including Debt Equity

18.5 11.3 2.7 0 15.8

28-Sep-08 24.6 11.8 6.7 0 17.9

Source: SEC Filings; year-ending September, 28.

Favorable industry outlook Use of wireless telecommunications devices has increased significantly in the past decade. According to Strategy Analytics, the number of worldwide mobile subscribers is expected to reach approximately 5.6 billion in 2013, from 3.9 billion at the end of 2008. The total number of WCDMA subscribers is expected to grow from 340 million at the end of 2008 to over 2.2 billion by the beginning of 2013.

QUALCOMM Incorporated (NASDAQ: QCOM)

4

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

Investment sentiment QCOM is a pioneer of CDMA digital wireless technology and one of the leading enablers of 3G wireless products and services. The Company`s business operations continues to generate strong cash flow as a solid growth for CDMA-based devices is driven by a shift to emerging markets.

Despite the current vague macroeconomic conditions and potential for further economic slowdown, QCOM is well positioned to navigate through these uncertain times and will continue to focus on its long-term strategic goals. As a result of strong growth opportunities and favorable industry outlook, we consider QCOM as a good investment option and rate it with Buy target.

Peer Comparison Company Name 12/23/08 Company Name 24-Dec-08 Nokia Corporation Infineon Technologies AG STMicroelectronics Motorola, Inc Texas Instruments Inc. Broadcom Corp Cisco Systems Inc

Ticker symbol NOK IFX STM MOT TXN BRCM CSCO

Price per Mrkt. Cap. Share, $ $ Mn 14.07 1.09 6.53 3.94 14.45 16.58 16.35

79,314 734 5,671 9,133 18,487 8,857 95,847

Median Qualcomm, Inc.

QCOM

34.16

56,584

P/E 2008 2009

P/S 2008 2009

11.17 n/m 8.95 98.50 8.16 9.70 10.62

9.20 n/m 6.66 10.10 7.57 9.87 9.67

1.98 0.08 0.58 0.28 1.38 1.84 2.43

1.85 0.07 0.55 0.26 1.33 1.64 2.19

10.16

9.44

1.38

1.33

15.96

13.94

5.42

4.81

Source: Yahoo Finance!

QUALCOMM Incorporated (NASDAQ: QCOM)

5

Analyst: Victor Sula, Ph.D. Initial Report December 30th, 2008

Disclaimer DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.

We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.

Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www. finra.org.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

QUALCOMM Incorporated (NASDAQ: QCOM)

6