Ladies and gentlemen, please welcome Chairman of the Board of Directors of Qualcomm Incorporated, Jeff Henderson.
Thank you and good morning everyone. I'm Jeff Henderson, Chairman of the Board of Directors of Qualcomm Incorporated. Welcome to Qualcomm's 2019 Annual Meeting of Stockholders. Before I call the meeting to order, I would like to introduce the other members of the Board who are attending with me. Barbara Alexander, Mark Fields, Anne Livermore, Harish Manwani, Mark McLaughlin, Steve Mollenkopf, Sandy Rand, Doctor.
Francisco Ross, Irene Rosenfeld, Neil Smit and Tony Vincicquer. I'd also like to introduce our other executives who are present today. Again, Steve Bollenkopf, Chief Executive Officer Cristiano Aman, President George Davis, Executive Vice President and Chief Financial Officer Brian Modoff, Executive Vice President, Strategy and M and A Alex Rogers, Executive Vice President and President, QTL Don Rosenberg, Executive Vice President, General Counsel and Corporate Secretary Michelle Sterling, Executive Vice President, Human Resources and Doctor. James Thompson, Executive Vice President, Engineering and Chief Technology Officer. I'd like to acknowledge Dee Kaufman, one of the co founders of Qualcomm, who is in attendance today.
I'd also like to acknowledge Doctor. Irwin Jacobs who is also in attendance. In addition, President, Jay Raines of the law firm of DLA Piper, the company's outside corporate legal counsel and Michael Brandmeier. They clapped for a lawyer, Jay. And Michael Brandmeier, the accounting for PricewaterhouseCoopers LLP, the company's independent public accounts.
Mr. Bradmire will be available to answer any questions concerning PricewaterhouseCoopers and its services to the company. Qualcomm's 2019 annual meeting of stockholders will now come to order. I'll act as Chairman of this meeting and Don Rosenberg will act as Secretary. Will the Secretary please report with respect to the stockholders list and the distribution of the notice of the meeting?
I have at this meeting a complete list of stockholders of record of the company's common stock on January 14, 2019, the record date for this meeting. I also have an affidavit certifying that on January 24, 2019, a notice of the 2019 annual meeting of stockholders was distributed to stockholders of record as of the close of business on the record date. The affidavit of distribution will be attached to the minutes of this meeting.
Thank you. Stockholders who have voted by proxy, either by mail, Internet or telephone need not cast ballots today, unless they wish to change their vote. Prior to opening the polls for voting, we'd like to distribute ballots to anyone who did not pick up 1 at the registration table and would like 1. Please raise your hand if you'd like a ballot. At this time, I appoint Doctor.
Peter Deskovich to act as the Inspector of Election for this meeting. Mr. Deskovich has taken this ascribe to the customary oath of office to execute his duties with strict impartiality. This oath will be attached to the minutes of this meeting. Mr.
Duscovich's function will be decided upon the qualification of voters, accept their votes and when valuing is complete to tally the final votes. Will the Secretary please report with respect to the existence of a quorum?
I have been informed by the Inspector of Election that at least a majority of the company's outstanding shares of common stock are present in person or by proxy. This constitutes a quorum for the transaction of business.
Thank you again. Requirements for calling this meeting have been duly observed and are represented here more than the necessary number of shares of the outstanding common stock of the company to constitute quorum, I hereby declare this meeting to be duly constituted for the transaction of all business. The formal business of this meeting is listed in the notice of annual meeting and proxy statement that was provided to stockholders. There are several proposals to be considered by stockholders at this meeting. We will now place each of these proposals before the meeting.
Following the formal business of the meeting, we will adjourn and Steve Mollenkopf will provide a business update and then we'll take questions. The meeting will now proceed to the first item of business. Proposal 1 is the election of 12 directors to serve until next year's annual meeting of stockholders. The Board has nominated the following persons for election as directors of the company and recommends that stockholders vote for each nominee. Barbara Alexander, Mark Fields, Jeff Henderson, Ann Livermore, Harish Manwani, Mark McLaughlin, Steve Mollenkopf, Clark Grant, Jr, Doctor.
Francisco Ross, Irene Rosenfeld, Neil Smit and Anthony Vincaquerra. Those nominations need no second. Since no other director nominations were received prior to the deadline specified under bylaws and stated in last year's proxy materials, The nominations are closed. Is there any discussion? Proposal 2 a ratification of the selection of PricewaterhouseCoopers LLP as a company's independent public accountants for our fiscal year ending September 29, 2019.
The Board recommends that stockholders vote for this proposal. Is there any discussion? Yes, sir.
Mr. Chairman, I'm Mike Schafer, shareholder resident of San Diego. I noticed there is several $1,000,000 increase in the fees from last year to this year. Is there could you auditing fees, could you explain that a little bit to us?
Sure. Actually, I'll call on George Davis, our Chief Financial Officer, who could comment on that.
The level of services for particularly for the NXP transaction and also some tax matters, As you know, tax reform repatriated offshore earnings, tremendous amount of work went into making sure that our new tax policy to comply with that conformed with all the accounting regulations. So it was a year of heightened activity. PwC has been very good as we've gone through cost reductions and other things, pulling their fees down during those periods. So we've had a good relationship there.
Thank you.
Thank you. Thank you for your question. Thank you, George. Anything else? Proposal 3 is the advisory vote for approval of the company's executive compensation.
The Board recommends that stockholders vote for this proposal. Is there any discussion? Seeing none, If you wish to vote by ballot on these matters, please hold up your ballot so that Usher may collect it. Have all ballots been executed and delivered?
Yes, Mr. Chairman.
The time is now 9:41 a. M. And I declare the polls closed. Has the Inspector of Election completed the tally?
Yes, Mr. Chairman.
Please report on the results of the voting.
Mr. Chairman, based on the proxies and ballots received, I can report that all nominees for Director have been elected. The selection of PricewaterhouseCoopers as the company's independent public accountants for the fiscal year ending September 29, 2019, was ratified. The advisory vote for approval of the company's executive compensation passed.
Thank you, sir. The full voting results will be published on our website and reported within 4 business days on a Form 8 ks, which will be filed with the Securities and Exchange Commission. This concludes the formal business of our meeting. Is there a motion to adjourn the meeting? 2nd?
As we move and seconded, this meeting will be adjourned. Hearing no objection, this meeting is adjourned. And now I could turn the meeting over to Steve Mollenkopf for the business overview and update. Then we'll open the floor for questions. Any stockholder with questions should form a line at the microphones in the aisles after Steve's presentation.
In fairness to all stockholders, you'll be permitted up to 2 minutes for your questions or comments. Steve?
All right.
Thank you. Thank you, Jeff, and thank you everyone for coming and joining us today. So before I get started, I just want to remind you of our Safe Harbor statement, you can review it in detail on our website. Let me start by again thanking you for being here and being with us through very eventful couple of years. Fiscal year 2018 was really a challenging year in many areas, but also I think one that positioned the company very strongly for the future.
And we greatly support greatly appreciate the support of our investors. We continue to be focused on execution. See significant opportunities ahead. We're well positioned, we think, for some large changes in technology. And we've had an impact with litigation, but we've also had tremendous growth in areas like China and our ability to get ready for the launch of 5 gs and the ramp of the technologies associated with 5 gs, which we really put in place at the end and during the fiscal year 2018.
With in addition, we continue to execute on our growth strategy and deliver on our capital return commitments. So we're committed to returning capital and we've announced plans and they remain on track. As of the Q1 of fiscal year 'nineteen, we have returned over $86,000,000,000 in stock repurchases and dividends to shareholders. Dollars 22,000,000,000 of our $30,000,000,000 share repurchase authorization has already been completed. And with respect to the dividend, we are not announcing any change at this time.
We continue to execute well in the business and are seeing success in the areas that we're targeting. In 2018, we helped lead the effort to accelerate 5 gs standard by a year. I'll just remind you if we went back 2 years ago, everyone was saying the launch of 5 gs will not happen until 2020. And now it's clearly happening now in 2019. We've pulled in the roadmap.
There are now 35 plus 5 gs licensing agreements. Our flagship Snapdragon product, the Snapdragon 855 has over 100 designs currently ongoing and we have over 30 plus designs for 5 gs that will launch in 2019 alone. For our new products, our growth in adjacent areas, we're building on the leadership of the fundamental technology that the company is developing and we look to be able to rapidly scale into new industries. In addition, we made commitments on our cost structure and how we will position the business for long term growth. They remain on target.
We have some excess cost in the business due to litigation, but we anticipate and hope that those disappear and move out of the long term run rate of the company, as I'm sure we all are. So let me just quickly talk about Qualcomm. And I think the easiest way to think about Qualcomm is that we are the company that invents the fundamental technologies that make new industries happen. And we've been very lucky to have the capability and the ability to generate those technologies. There are more technologies to be able to do it.
And I think the results and the economic gains to come from having those technologies are now even larger than they've been any time in the company's history. So we're really fueling a new era of innovation. It's if you look at what we're working on now, we really put it in the same bucket as you would water or coal or electricity in the industrial age. If you think about what those technologies or what the harnessing of those technologies did for mankind, it was very significant. Similarly, the Internet and digital digitization really ushered in the information age.
But 5 gs will usher in what we think is an invention age. And Qualcomm is at the beginning, creates all the technologies or many of the technologies that are required in order to enable that big transition. So you should think of it as we're the company and one of the few companies worldwide that creates those technologies and then scales them throughout the entire world. There's a tremendous amount of responsibility we think, but also a tremendous amount of opportunity for our shareholders. So if I look at 5 gs, how do I think about it?
You should think of it as something that allows connected computing and smart connected computing to exist, which is probably the most significant economic force that's happening. Clearly, we all know about the impacts of AI to the world. But what 5 gs is going to allow, it's going to allow AI to really reach its full potential. And that only happens if it's done wirelessly and it's and if it happens where the technology and where the data is actually being created and consumed. So if you thought about the 1st generation of AI being in the data center, the next generation of AI is going to be what travels along with you.
And Qualcomm is positioned better than any company in the world in order to lead that transition. And it's here. So the big discussion today is how fast can I get 5 gs? About 2 years ago, everyone wanted to know what is 5 gs and when is it coming? Now it's about how can I get it?
And so today, this 2019 is the year the industry has been waiting for. The deployments are happening around the world. We're laying the foundation and we're getting ready to transform many different types of industries. And it's happening faster, actually faster than 4 gs. A lot of folks would ask us, what do you think is going to happen in the ramp of 5 gs versus the ramp of 4 gs or 3 gs?
So we so let's just take a look at the data. So if you look at 4 gs, when we launched 4 gs, the 1st year of launch, there were only 4 carriers that we're launching, large carriers, very significant carriers. And we had 3 different OEMs that were generating devices in that 1st year of launch. The handset manufacturers and the operators tended to be focused in North America, it was limited to 4 carriers and 3 handsets. Today, we have over 20 operators launching in the 1st year of 5 gs and over 20 different OEMs that have announced products, including the largest markets in the world are transitioning to 5 gs.
So it's a tremendous opportunity for us and actually happening much faster than we've seen even in the 4 gs transition. And why are they working with us? Why are we so engaged and why are they what are they excited for? Well, first of all, they're working with us because we have a history of success. We have an ability to launch technology at scale around the world across multiple partners so that we can grow the industry broadly.
And in order to do that, we've had to invent some things and we had to deal with, I think, people that or deal with problems that people thought that couldn't be solved. For example, what they told us was that 5 gs devices would be bulky. They'd have poor battery life and they wouldn't be here until 2020. And of course, we thrive on having opportunities like that or people telling us that these things are not solvable. So we went and we did a lot of work.
We came out with the X50 family, the 855. We worked on millimeter wave technology. We worked on power saving technology that went into the the we made sure that everyone in the industry had the opportunity to take advantage of it so that the entire industry would grow and not just a few companies. That's really the role that we have. So they said it couldn't be done.
We invented it. And the ecosystem, I think, is reflecting that strength of the company. And hopefully that will be a very good opportunity for the shareholders. And in addition to just launching these things, these things are being now recognized as excellent products just in and of themselves. So we have multiple best of awards at Mobile World Congress.
Mobile World Congress in Barcelona several weeks ago, I think was a great demonstration of all of the things that Qualcomm does in its ability to orchestrate the industry and to have it transition to new technology areas into new big pass forward. If you combine what happened at CES and Mobile World Congress, we have over 150 different awards from product families product customers from ourselves or from partners winning best of awards. It's just been a tremendous successful product execution that we've been able to celebrate here with the launch of 5 gs. Now, how should we think about that as a shareholder? How should we think about it as a company?
5 gs and this is for me, this is the 3rd generation of cellular that I've participated in the launch of at Qualcomm. And this is the one that in my view has the largest economic impact to the world. And it's primarily because that economic impact is not just in the cellular industry, it's in almost every other industry. So if you look at what is disrupting industries worldwide, they're all trying to deal with the following trends. Number 1, all of their things or their business is being connected to the Internet and there's a tremendous amount of data.
Increasingly, that's happening wirelessly. And they need to make decisions on that data. More and more of those decisions need to occur at the place that the data is originating from. And what's happened to Qualcomm is in addition to providing fundamental technologies that are important to the cellular industry, we're now at the center of creating the fundamental technologies that are important to almost every other industry in the world as it's trying as they are trying to take advantage of this fundamental trend that's happening. And that's what 5 gs represents.
So we did a study and we tried to figure out how much economic value will be created by these goods and services that 5 gs will enable. And the numbers are staggering. It's actually $12,300,000,000,000 There's a lot of precision there, but it's in the category of a lot of money. Qualcomm has put itself in a position where it is the really the fundamental partner for that transition. And we've been able to do that leveraging the history of the company, the capabilities of the company and doing it during I think, a period of a lot of what would seem to be a lot of distraction, but very, very proud of the company to be able to put itself in a position so that we can provide that opportunity not only to the industry, but also to our shareholders in terms of the ability to have the fundamental technology that transforms the world.
And so how do we do that? What is the business model that does that? We've had a unique business model. We invest in R and D early. We commercialize it worldwide.
We collaborate with people both in the standards bodies and in the infrastructure side. And we make sure that the entire industry is working forward and moving forward in order to create the opportunity. The business model is around creating a larger pie that we can all benefit from as opposed to we have a fixed pie and let's figure out how we can get our share. And it's been a tremendous business model, continues to function well and we look forward to having yet another generation to apply it to in terms of generation of cellular. So with that, I want to provide a quick context to what we've been seeing.
Obviously, over the last year, 2 years, we've seen a number of legal and regulatory challenges. And rather than go into the details of that individually, I would just kind of pop up a level. You should interpret that or the way we interpret that is our technologies that we're working on are very important. They're important to the industry. They're valuable.
They're becoming more valuable as we add to them and those technologies become more relevant. And I think the battle as to how we can monetize those is becoming more and more in the legal domain, at least it has for the last year, year and a half. And Qualcomm didn't start those discussions, but we feel that it's important to be able to defend what the shareholders own and the value of this IP. And of course, we've been able to do that. We're very pleased with the way in which these trials have gone.
We're currently in the process of defending ourselves in a lot of areas. We hope to be through a lot of that soon, although it could continue depending on how things work out. But a couple of things are happening, I think I would point out. Number 1, we've been able to establish the value of not only our cellular patents, but also our non essential patents. You've seen that we've been able to get injunctions worldwide.
That's just a testament to not only how important we are to cellular, but how important we are to computing and to video encoding and many different areas that allow these technology transitions to occur. But I think the thing that I'm most proud of from the company is not only that we've been able to work through these issues, again, we didn't start them. But we've been able to deal with the distraction of those issues and continue to position the company from a product and technology perspective where it can take advantage of all of this tremendous economic change that will occur associated with 5 gs after these issues are done. And I would just encourage people to think about what is on the other side of this and who is best positioned to benefit from the transitions of cellular. I think we're probably more relevant in the industry than we've ever been.
And the technology opportunity has become larger than we ever have seen as a company. So with that, I'll close and welcome everyone back on stage I guess to have Q and A. Thank you very much.
Okay. We're opening up for questions. Please make your way to the microphone if you have any questions or comments for any of us. Sir?
I would think there would be a number of people standing in line at most annual meetings. People are curious about their companies. Again, I'm Mike Schafer. I'm a native of San Diego. I spent two terms on the City Council, and I am marveling continuously what Qualcomm has done and Doctor.
Jacobs for our community. I'm so excited. I'm going to double my holdings in the company. When I was City Councilman, I was the youngest Councilman in California, which was a lot of fun. I was 27 until Maureen O'Connor came along at 25 and took away my title.
And today at 81, I am the oldest official of the State of California. I am on the Governor's Cabinet. I'm the member of the Board of Equalization. And if the other 11 would go out of state, I would be governor for the day. I'd like to mention that 20 years ago or so, I knew Tom Bernard as an employee of Qualcomm.
And Tom, I first got to know as a child movie star when he was about 12 and I was about 10. He played in the Ruggles family on television every Sunday with Aaron O'Brien Moore and Charlie Ruggles. And then he went on to be in Rebel Without A Cause. He had quite a career with Aurora Corporation and then quite a career with Qualcomm. And he died last March 22nd and left 4 kids and 5 grandkids and a lovely wife.
And so it's nice that Qualcomm was an important part of his life. I'm a big fan of our directors all having stock. And we have 3 directors that are not stockholders because they're new, Mark Fields, Irene Rosenfeld and Neil Smart. I understand they have shares that will vest in the next couple of years, but I don't think that's quite good enough. I would like the Cees to go out and buy at least 1,000 shares of our stock and join me as a fellow shareholder.
If you're going to be a public official, you've got to be a registered voter. And if you're going to be on our Board of Directors, you should be registered as a stockholder. I would like to ask if the media were invited to our annual meeting. I think it's important that we extend to international and national media to come and participate and most leading companies do. Could somebody tell me have we invited the media or if not could we do so in the future?
Yes, the media was invited and it's open to them and maybe some of them in the crowd today, I'm not sure.
That's very good. Well, that's really all I had to say. This is my first annual meeting and my first visit to the campus and I am amazed.
Thank you for being an investor. Thank you for speaking today. I appreciate
it.
Sir?
Yes, I'm Doctor. Sanford Greenberg, and I've been with your company for over 30 years. As more data gets on the Internet, there's a higher risk of cybersecurity. And how do you address that problem?
Sure. Why don't I start and if others want to jump in. I think there are a couple of things that we do. Number 1, and this is particularly true in the 5 gs standard. There's been a lot of work that went into the standard itself so that it's just inherently more secure.
So the network is more secure and the transition of the data and the transit of the data is done in a more reliable and secure way. That's point number 1. Point number 2, Qualcomm is working in creating technologies that go into the device that allow you to authenticate not only the user, but make sure that the data itself is held secure. Some of those things are very kind of technical and architectural, meaning that the way the chip is built, it's done in a particular way so that the data is held in a very secure way. But in addition, we want to make sure that we can authenticate users.
So you've seen, for example, in the new Samsung device, it has a fingerprint sensor, an ultrasonic fingerprint sensor, which is made by Qualcomm. It's investment we made by building on a company we bought several years ago. And what that does is a very secure way of making sure that that user and only that user is the one creating those data. And one of the reasons that that's important is there are certain technologies connected healthcare or what have you where without those technologies those industries wouldn't grow. And so therefore what we're trying to do is make sure those technologies are not only mature but available for the industry to take.
So it's a big issue in terms of the what technologies can we invent to create an opportunity so that these cybersecurity issues can be dealt with as best they can, but very important issues as you know.
Thank you. Thank you.
Sir?
My name is Leonard Hirsch. My question is, we've had a problem with the pricing policies. And with the advent of the 5 gs now, are we going to rethink the way we price our products so that we don't face the legal problems that we've been facing?
Alex, do you want to I think it's probably primarily referring to the licensing.
Yes. So on the licensing side, we actually rolled out our pricing for 3 gs, 4 gs, 5 gs, multimode devices at the end of 2017. And in order to 1st of all, in order to get ahead of the specification, in order to get ahead of the standard that was adopted for 5 gs. But what we actually did was we kept our 5 gs pricing at the same level that we had our 3 gs, 4 gs SEP only pricing. So we actually didn't increase pricing.
So even though we added more technology, more patents to a particular license, we kept the pricing level set with what we had established in China as a result of the resolution that we had in China. So we've actually signed up in China for 3 gs, 4 gs at a certain price, well over 100 agreements and had a very successful program established there since 2015. And rather than raise pricing for 5 gs, in part for the reasons that you just identified, we kept that pricing level set for the rest of the world. So we took a kind of a modest conservative approach to pricing.
Thank you. Sir?
Hi. My name is Phil Cohen. I'm a stockholder, long time resident of San Diego, known Joan and Irwin Jacobs for many years, long before they started their corporations. My mother actually helped Erwin with his first venture, which was Linkabit. I know lots of people who work for Qualcomm starting with Irwin, worked after there.
I'm not very knowledgeable about technology. I still have a flip phone. But am an attorney, I've represented employees for decades and I have some knowledge of employees. And my concern with the company that I've seen over the years is more to do with the employees, I know we have thousands of employees. I know that when Erwin started working for the company, he worked 80 hours a week.
Employees worked hard. I know that every year he worked for the company, he was heading up the company, Qualcomm had a reputation as the best or one of the best companies in the city to work for. I haven't heard that since he retired. From my perspective, I've known there have been problems with employees, abuse of employees. I know for a fact, just like a few years ago, there's a 500 person dinner at, I think it was a Konakai Club for the HR Person of the Year for San Diego.
But there was no one from Qualcomm who was considered. And kind of ironically, it was somebody who only started working in HR since 2012 who won that award. I'm told that since then there haven't been any mentions of Qualcomm people as being among those considered for the top HR in the city. I've been told that managers since Irwin left were highly paid and walking around Qualcomm and not doing any work. It creates a burden on shareholders, just money being paid for people who aren't carrying their weight, but I'm also told there was bad morale.
And basically, my concern is what is being done to improve HR. What I'm told by the people who are considered to be top HR, it takes 2 things. It takes a top HR person and they need the support of the CEO. And so I haven't heard any discussions about that, but I know there's thousands of employees at Qualcomm. I know that Broadcom sale was that we have tremendous assets, but why don't we turn the company over to Broadcom so it could be managed better so the shareholders realize value.
And to what my thinking is, management of the company includes managing the employees. And so what I haven't heard is what's been done to improve the management of the employees?
Why don't I take the first part of that, Michelle, if you want to jump in, go ahead. Well, first of all, I think we have a tremendous heritage to build on from Doctor. Irwin Jacobs. And I also I think it'd be remiss if I didn't acknowledge that Joan Jacobs is here as well, who normally gets introduced and has a big contribution to the company. We had a great foundation to build from.
And I would tell you that I think my perspective is that the Esprit de Corps continues here, tremendous pride in the company. And I would also say there's a lot of work that's being done. Michelle has done a lot of good work to continue to maintain that and to grow it. It's a very different environment that we're in today than we have been ever before. But I think we're thriving in that environment.
I clearly appreciate your comments. We will take them as well and we'll continue to move forward. Sean, I don't know if you want to add anything. Sure.
Thank you for your question. And I think nothing has changed today from when Doctor. Jacobs was running the company with respect to the importance of our employees. Without our talent in the organization, we can't accomplish all of the things that you saw today. So that is absolutely a priority for us.
As Steve mentioned, we have had a difficult couple of years, and the employees certainly have felt that impact. But this is an area where we are focused on as an entire leadership team because the retention of our top talent, the thriving culture that we've always had in the company is equally as important in order for us to meet all these objectives. And so our area of focus is definitely on our employee base. We do have a number of initiatives, as Steve has indicated. We run surveys throughout the company to identify the areas where we need to focus on further as a management team, and then we structure initiatives around those areas.
So it's absolutely important to us more today, especially in a very competitive labor market, more today than ever before.
Well, I just want to give you one example. Back last February, when we were in the midst of this attempt to take over by Broadcom, I would have expected there would have been extensive efforts to improve management. I received a call from a partner at one of the largest law firms Procopio. His partner had on the phone an employee of Qualcomm who just started in December of 2017. This is February.
And this person told me that he was being constantly abused by a co worker. He went to management, nothing was being done. He was so traumatized. He told me no matter what changes made, he could no longer work for Qualcomm. And I guess my question is, what concrete steps are being made to improve the management of the employees?
Well, I think what we'll do is we'll get with you afterwards and make sure we understand that experience. It's clearly not the experience that we hear from employees in through our personal experience or through any of the employee surveys. So I appreciate your question. I think maybe for best thing is just to follow-up with you directly and make sure that we're addressing that issue. Okay.
I'd be happy to do it. Thank you.
The current administration's policies are somewhat inconsistent and I wanted to see if that has affected your strategies internationally and if so how?
Yes, I would say one of the benefits that Qualcomm has is that they are very relevant in technologies that are more relevant and increasingly more relevant to governments around the world. So what we have been able to take the kind of the freedom to be able to do this is that because we're so important to a lot of technology areas that are very important to governments, we can find some win win way to work together. And we've been able to do that in the United States. We've been able to do that in China. We've been able to do that in Europe and in Southeast Asia and around the world.
And we tend to operate at that level. We tend to operate at we have important technologies. These technologies are important to governments economically, security wise, what have you. And we can find out how to work through it. We tend not to and to get involved in individual policies outside of the areas that touch those areas.
Of course, we have important HR and tax related things that we have to deal with. But I would tell you the environment that we see to do business worldwide and in particular to do business associated with the technologies that Qualcomm works on is very good still. And I think that is just a statement to how relevant the technologies and how important we are to those technologies continues to be. Thank you. In
In the interest of time, I would say we'll take these last three questions and then we'll wrap up. But please go ahead. Why don't you go first, sir?
My name is Tony Capen. I'm a longtime San Diego resident. My neighborhood as well as several others are mobilizing to fight back against the cell towers that we acquired for the rollout of 5, especially as we are in the processes of undergrounding utilities in the neighborhood. There are just not existing public poles to attach these towers. My understanding is they need to be every 1,000 feet and each carrier requires their own.
This means we have these what will probably be very intrusive poles along our residential streets. I'm concerned about the ability for the rollout to occur as this opposition forms? And is there anything that can be done to ease that requirement?
Do you want
to take that?
Do you want
me to take it, Christian? Actually, I'm happy to. So I would say, first of all, we obviously don't work in that area, but we do get insight into some of the technologies and the trends that are happening. With 5 gs, as you mentioned, you will have more dense deployments that occur, particularly in populated areas. So the spacing between the base stations will be closer.
But I would tell you that by and large people are trying to figure out how do they get more mileage out of the towers that are already in place and augment that by some home related small cells. That tends to be the deployment technique that is occurring. That being said, anytime we roll out cellular, you run into these issues with how the infrastructure deployment and the local communities cooperate. Unfortunately, we don't have a big dog in that hunt as they say, But we're trying actively to invent the technologies that allow 5 gs to be commercially deployed, let's say, in your home in ways that are more analogous to things that people are familiar with. So for example, your wireless access point, for example, if that can have both Wi Fi and 5 gs connectivity, that might be something that enables the industry to grow.
But unfortunately, that is not an area that we have great insight into, but I appreciate your question very much.
Correct me if I'm wrong, but the federal government ruled just recently on the cost of cell towers for 5 gs, correct?
Yes.
To your advantage, my question or statement. I've been a long term investor really since the early 1990s and many of you have seen me over the years. And I enjoyed the rise of Qualcomm under Irwin Jacobs, thank you, and the diversification of Qualcomm under Paul Jacobs. Qualcomm management arose from the pre IS95 turmoil and into the 20th century. They had their setbacks and they had their legal suits.
But they had cash flow and they had no debt and plenty of retained earnings. But that's changed in the 21st century. It's changed since 2014 substantially. Today in federal court, and I sat in on the federal court hearings earlier last week, Judge Sabra continues to hear the Qualcomm Apple suit. The FTC, Korea, China, EU and others loom in the near future.
Qualcomm is hemorrhaging 1,000,000,000 of dollars. Qualcomm is like Gulliver being assaulted by Lilliputians and by Giants. Yet from 2014 to 2018, Huawei's subsidiary, I think HiSilicon or I forget how to pronounce it, their annual revenues have tripled to over US7 $1,000,000,000 and they too are focused on 5 gs, polar codes and they have many thousands of engineers. You exist in a world of turbulence created while you have been at the helm, so these last 4, 5 years, speaking to the upper management. Stockholders' equity has decreased by over $30,000,000,000 since 2014, including cash, total assets, long term debts.
These are very negative numbers. And as every engineer knows, the square root of a negative number is imaginary. So what imaginary numbers will solve your ongoing problems? What silver linings will allow you to continue Qualcomm's descent into the inferno? What legacy will you leave?
So I believe if you're fired, Steve, I think or hit by a truck, you receive up to $55,000,000 of your family. And this isn't a joke, but the lawyer, Don Rosenberg, they only give you $12,000,000 I don't know, not a lawyer joke. So Louis 16, he said after a disaster. And that was after the battle in 17/57. So my question is, what's your legacy at Qualcomm?
And my question to which I'd like an answer is, when do you envision reversing the tide? So that's a general question, but be specific please.
Thank you for your question.
Sure. So why don't I just take a quick
first of all, appreciate
the question. We've seen you for many years and encourage you to continue to do that. I would say, we have had a lot of challenges. We've had a lot of things. But I would just remind you, we are still the company that produces the fundamental technologies that drive the industry forward.
We have been for a long time and we have to get through some of these legal challenges. We've talked about how we're we for the last 2 years that 2019 will be the year that I've always described it as the Q4 of the game. You're seeing a lot of those legal milestones play out. We can't as you would imagine not we can't talk about that in great detail. But I would tell you we feel good about the job that we've done to protect the company.
And if you look fundamentally, we think that we'll be able to prevail. You're seeing some good things. Hopefully, you were encouraged by what you saw in court when you were there. We certainly have been. It was
at least even.
And so we think we'll get through these things. But I think I'll just remind you that the ability to create technologies that are relevant and relevant at the scale that I described in my remarks is unique to Qualcomm. It will always be unique to Qualcomm. And it's something I think not only the people on this stage are proud of, but also I think many of the people in the audience, but also the entire employee base. And I think that'll be a tremendous capability that we'll look back on and be very proud of.
Yes, I'm very happy to have been a shareholder, don't get me wrong. However, and I don't mind no increase in dividend, that's fine, because long term investments take long term have long term obligations, but somewhere hopefully a tide will change. So you're saying 2020?
I'm not giving a date, I'm actually saying this is actually played forward pretty much the way that we've had to react to. And I would just think with one exception, 5 gs is a year here a year earlier than we would have said 2 years ago. And we think we're even more relevant in that transition than we have ever been. I appreciate your question. I really do.
Just maybe ask that the gentleman have the final question. Thank you.
My name is Philip Nerhoud. I've been a shareholder for some 25 years. First of all, I'd just like to make a comment about employees. When things are going great, sales are rising, you're hiring people, stocks are going crazy, everything is wonderful. And when it changes a little bit and gets a little negative, it's not the same feeling that it was when things are going well, and that's just human nature.
So I'd just like to say that I think Qualcomm is, if not the best, is one of the best employers in the history of San Diego. I have two questions. Which is the biggest or most important lawsuit of the ones that are going on right now? And what would be the positive effect if you win and what would be the negative effect if you lose?
Don, you just
I just want to note for the last questioner that I thought he was getting to, it's cheaper to kill me than it is to kill Steve.
I'm a little concerned about the
target there.
Yes. So look, we obviously take all these lawsuits very seriously, certainly the ones that and just for the other questioner, remember, a lot of these lawsuits are lawsuits we brought. And it's not so much the little cutions, it's the giants who we're dealing with. We're dealing of course with Apple, who is the biggest giant of all and several regulatory agencies around the world that they have tried to instigate and empower and that's just a fact. We're also dealing with Huawei and Samsung who are also if you look at who are the biggest device sellers in the world and certainly in the United States, you've got Apple, Samsung and LG.
Huawei is not permitted here.
I hear you talk. There's not one that's clearly the most important. There are several.
No, I'm going to get to your question. So clearly our litigation against Apple is something that's high priority. Steve's talked about that many times. As was said earlier, we have the FTC case which was filed you'll recall about 2.5 years ago, 3 days before the administration changed by 2 commissioners, just 2 commissioners, and a third dissenting very vigorously. That has gone through trial and we are awaiting a decision in San Jose from the judge there.
We believe, I think as Steve referenced, that our team did a very good job. We think the FTC failed to prove the case that it made. We think it lacks a lot of credibility from a lot of perspectives. But we're waiting for the judge to decide that and we can't say much more about that. If the opportunity presents itself right up until the end, as always, we're willing to find a way to resolve it if we can with the FTC before the judge rules.
But one way or the other, that's going to be determined fairly soon. And that will have some significant impact on our moves forward. If it's against us, we're going to have to appeal it, obviously, and we're going to have to determine what extent that ruling goes to the continuation of the business as we're running it at the moment and whether we need to make any changes. But that's really the one that's most on our minds as we look at least in the immediate future.
I don't think you've answered my question. Is there anyone important?
Most important? Well, as I said, no, I think my point was right now, the most important case that we're awaiting decision on now is the FTC case. Is what? The FTC, the case that was in San Jose. We've got the Apple case in April, you talked somebody talked about the case currently going on in San Diego here, that's 3 patents that we sued Apple on.
That will be over probably the end of this week. There's a jury there and we'll await their decision. The big case in San Diego is the one that begins in mid April. And that's the one in which we are seeking restitution for the contract manufacturers that produce iPhones who have not paid us for their license agreements for the over 2 years now, 1,000,000,000 and 1,000,000,000 of dollars.
All right. Well, can you take one, if you want to be Apple or whoever you want it to be and answer the question, if we win, what does that mean in simple English? And if we lose, what does that mean in simple English?
Well, in the Apple case Much like
a lawyer talk who's a businessman.
Okay. Well, I'll give it a shot and then one of the business people can try. The Apple case, which is in April, that I referenced, if we were to win that we would collect the 1,000,000,000 of dollars that they had failed to pay us over the last 2.5 years.
Long term, what would that mean?
Long term, presumably, that would mean that if they're going to continue to use our intellectual property, they're going to have to continue to pay us. The impact on the rest of the business presumably would be very positive because the major company in the industry who has refused to pay us for intellectual property is now forced to pay us for that intellectual property. Presumably that will have an impact on others like Huawei and like others who may decide that they're going to breach their contracts and fail to pay us. And if you lose? If we lose, we're going to have to appeal and ultimately win.
But we will not collect the 1,000,000,000 of dollars that I talked about immediately at least until we win that appeal. And we'll have to see what happens in terms of others, whatever actions they may take.
At this point, we'll wrap this up. Thank you very much everyone for attending and thank you for those of you who asked questions as always. And to all of our shareholders here, thank you for your support and your investment and have a wonderful day. Thank you.