UPDATE 1-Qualcomm CEO vows to return 75 percent of free cash flow

Noel Randewich
Wednesday, 20 Nov 2013 | 11:18 AM ET

SAN FRANCISCO, Nov 20 (Reuters) - Leading mobile chipmaker Qualcomm plans to return 75 percent of free cash flow to shareholders through stock buybacks and increased dividends, Chief Executive Paul Jacobs told analysts at an event on Wednesday.

Unveiling his new capital return commitment, Jacobs said Qualcomm would grow dividends faster than earnings and continue opportunistic repurchases as well.

Many investors have called for debt-free and cash-flush Qualcomm to distribute more profits to shareholders and the company's plans for capital returns have been a major question for analysts going into this year's investor day in New York.

"I think it's decent. I was looking for something systematic rather than one-time, seems like we've got that," said Bernstein analyst Stacy Rasgon. "I don't think this is hugely above expectations, but I don't think it's hugely below either."

Qualcomm's shares traded up 0.09 percent after Jacobs' described the capital return plan.

Earlier on Wednesday, Qualcomm announced a handful of new chips for mobile and networking gadgets ahead of its investor event, where analysts are also likely to quiz executives about a shift in smartphone growth from the United States to China and other developing countries.

Qualcomm said the fourth generation of its Long-Term Evolution (LTE) chip, used for fast data transfer in top-tier smartphones, would begin sampling by manufacturing customers early next year.

Qualcomm is the world's leading mobile chipmaker and is far ahead of Intel and smaller rivals in LTE technology.

With growth in the smartphone industry shifting away from wealthy markets such as the United States and toward China and other emerging economies, Wall Street has been concerned that less-expensive phones could impact Qualcomm's ability to sell high-end chips and hurt its profitability.

This month, Qualcomm said it would curb fast-growing operating expenses and release new chips a little less often as the company focuses more on less-costly devices.

While the new LTE chips unveiled on Wednesday are for top-tier smartphones, some of the technology used in them will find its way into cheaper components used widely in low-cost handsets, Cristiano Amon, executive vice president and co-president of Qualcomm's chipmaking division, told Reuters.

The San Diego, California, company also announced its newest Snapdragon 805 processors for tablets and smartphones, with new features for Ultra HD video.

The new Snapdragon chips will have up to 40 percent more graphics horsepower while using the same amount of battery power, Amon said.

Also, Qualcomm said that early next year, manufacturers would start selling routers and media servers with beefed up Qualcomm processors that allow for more connections and Internet traffic within the home.

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