• CDMA subscribers, including both 2G (cdmaOne) and 3G (CDMA2000 1X, 1xEV-DO, WCDMA and HSPA), are approximately 19% of total worldwide wireless subscribers to date.(1)

• 3G subscribers (all CDMA-based) grew to approximately 735 million worldwide by December 28, 2008, including approximately 400 million CDMA2000 1X/1xEV-DO subscribers and approximately 335 million WCDMA/HSPA subscribers. (1)

• CDMA-based device shipments totaled approximately 125 million units, an increase of 32% over the approximate 95 million units shipped in the year ago quarter. (2)

• In the handset market, CDMA-based unit shipments grew an estimated 17% year-over-year, compared to an estimated 6% year-over-year growth across all technologies. (3)

• The average selling price of CDMA-based devices was estimated to be approximately $212, an increase of less than 1% from the year ago quarter.

• We shipped approximately 63 million Mobile Station Modem (MSM) integrated circuits for CDMA-based wireless devices, a decrease of 20%, compared to approximately 79 million MSM integrated circuits in the year ago quarter.

(1) According to Wireless Intelligence, an independent source of wireless operator data.

(2) September quarter shipments derived from reports provided by our licensees/manufacturers during the quarter and our own estimates of unreported activity.

(3) Based on current reports by Strategy Analytics, a global research and consulting firm, in their calendar Q308 Global Handset Market Share Update.

Our Business and Operating Segments
We design, manufacture, have manufactured on our behalf and market digital wireless telecommunications products and services based on our CDMA technology and other technologies. We derive revenues principally from sales of integrated circuit products, license fees and royalties for use of our intellectual property, messaging and other services and related hardware sales, software development and licensing and related services, software hosting services and services related to delivery of multimedia content. Operating expenses primarily consist of cost of equipment and services, research and development and selling, general and administrative expenses.

We conduct business primarily through four reportable segments. These segments are: Qualcomm CDMA Technologies, or QCT; Qualcomm Technology Licensing, or QTL; Qualcomm Wireless & Internet, or QWI; and Qualcomm Strategic Initiatives, or QSI.
QCT is a leading developer and supplier of CDMA-based integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system products. QCT's integrated circuit products and system software are used in wireless devices, particularly mobile phones, laptops, data modules, handheld wireless computers, data cards and infrastructure equipment. The integrated circuits for wireless devices include the Mobile Station Modem (MSM), Radio Frequency (RF) and Power Management (PM) devices. These integrated circuits for wireless devices and system software perform voice and data communication, multimedia and global positioning functions, radio conversion between RF and baseband signals and power management. QCT's system software enables the other device components to interface with the integrated circuit products and is the foundation software enabling equipment manufacturers to develop devices utilizing the functionality within the integrated circuits. The infrastructure equipment integrated circuits and system software perform the core baseband CDMA modem functionality in the wireless operator's base station equipment. QCT revenues comprised 53% and 65% of total consolidated revenues in the first quarter of fiscal 2009 and 2008, respectively.
QCT utilizes a fabless production business model, which means that we do not own or operate foundries for the production of silicon wafers from which our integrated circuits are made. Integrated circuits are die cut from silicon wafers that have completed the assembly and final test manufacturing processes. We rely on independent third party suppliers to perform the manufacturing and assembly, and most of the testing, of our integrated circuits. Our suppliers are also responsible for the procurement of most of the raw materials used in the production of our integrated circuits. We employ both turnkey and two-stage manufacturing business models to purchase our integrated circuits. Turnkey is when our foundry suppliers are responsible for delivering fully assembled and tested integrated circuits. Under the two-stage manufacturing business model, we purchase die from semiconductor manufacturing foundries and contract with separate third-party manufacturers for back-end assembly and test services. We refer to this two-stage manufacturing business model as Integrated Fabless Manufacturing (IFM).
QTL grants licenses to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD, GSM/GPRS/EDGE and/or OFDMA standards and their derivatives. QTL receives license fees as well as ongoing royalties based on worldwide sales by licensees of products incorporating or using our intellectual property. License fees are fixed amounts paid in one or more installments. Ongoing royalties are generally based upon a percentage of the wholesale selling price of licensed products, net of certain permissible deductions (e.g. certain shipping costs, packing costs, VAT, etc.). QTL revenues comprised 40% and 27% of total consolidated revenues in the first quarter of fiscal 2009 and 2008, respectively. The vast majority of such revenues have been generated through our licensees' sales of cdmaOne, CDMA2000 and WCDMA products.
QWI, which includes Qualcomm Enterprise Services (QES), Qualcomm Internet Services (QIS), Qualcomm Government Technologies (QGOV) and Firethorn, generates revenues primarily through mobile communication products and services, software and software development aimed at support and delivery of wireless applications. QES sells equipment, software and services used by transportation and other companies to connect wirelessly with their assets, products and workforce. QES also sells products that operate on the Globalstar low-Earth-orbit satellite-based telecommunications system and provides related services. Through December 2008, QES has shipped approximately 1,314,000 terrestrial-based and satellite-based communications systems. QIS provides BREW-based (Binary Runtime Environment for Wireless) products that include user interface and content delivery and management products and services for the wireless industry. QIS also provides QChat, which enables virtually instantaneous push-to-talk functionality on CDMA-based wireless devices. QGOV provides development, hardware and analytical expertise involving wireless communications technologies to United States government agencies. Firethorn builds and manages software applications that enable financial institutions and wireless operators to offer mobile commerce services. QWI revenues comprised 7% and 9% of total consolidated revenues in the first quarter of fiscal 2009 and 2008, respectively.
QSI manages our strategic investment activities, including MediaFLO USA, Inc. (MediaFLO USA), our wholly-owned wireless multimedia operator subsidiary. QSI also makes strategic investments to promote the worldwide adoption of CDMA-based products and services. Our strategy is to invest in CDMA-based

operators, licensed device manufacturers and early-stage companies that we believe open new markets for CDMA technology, support the design and introduction of new CDMA-based products or possess unique capabilities or technology. Our MediaFLO USA subsidiary offers its service over our nationwide multicasting network based on our MediaFLO Media Distribution System (MDS) and FLO technology. This network is utilized as a shared resource for wireless operators and their customers in the United States. The commercial availability of the MediaFLO USA service to retail wireless consumers continues to be determined by our wireless operator partners. MediaFLO USA's network uses the 700 MHz spectrum for which we hold licenses nationwide. Additionally, MediaFLO USA has and will continue to procure, aggregate and distribute content in service packages which we will make available on a wholesale basis to our wireless operator customers (whether they operate on CDMA or GSM/WCDMA networks) in the United States. Distribution, marketing, billing and customer relationships remain functions that are provided primarily by our wireless operator partners. As part of our strategic investment activities, we intend to pursue various exit strategies at some point in the future, which may include distribution of our ownership interest in MediaFLO USA to our stockholders in a spin-off transaction.
Nonreportable segments include: the Qualcomm MEMS Technologies division, which is developing an interferometric modulator (IMOD) display technology based on micro-electro-mechanical-system (MEMS) structure combined with thin film optics; the Qualcomm Flarion Technologies division, which is developing OFDM/OFDMA technologies; the MediaFLO Technologies division, which is developing our MediaFLO MDS and FLO technology and markets MediaFLO for deployment outside of the United States; and other product initiatives. Looking Forward
We expect the global financial crisis and the resulting slowdown in the worldwide economy to continue to cause contraction in CDMA-based channel inventory resulting in lower demand for CDMA-based MSM integrated circuits, adversely affecting our revenues and operating results. In addition, the financial crisis may continue to have an impact on the value of our marketable securities portfolio and net investment income (loss).
The deployment of 3G networks (CDMA2000 and WCDMA) enables increased voice capacity and higher data rates, thereby supporting more minutes of use and a range of mobile broadband data applications such as connectivity to computing devices, streaming video, mobile social networking and multimedia messaging and downloads. As a result, we expect continued growth in consumer demand for 3G products and services around the world. As we look forward to the next several months, the following items are likely to have an impact on our business:
• In January 2009, the Chinese Ministry of Industry and Information Technology confirmed the issuance of 3G wireless licenses to the country's three wireless operators, including one license for TD-SCDMA, one for WCDMA and one for CDMA2000. We expect the issuance of these licenses will encourage competition and growth, and we will continue to support the operators and the industry to help provide Chinese consumers with a wide selection of 3G devices and services.

• The transition to 3G CDMA-based networks is expected to continue:

o More than 525 operators have commercially launched 3G networks, including 265 CDMA2000 1X networks and 260 WCDMA networks; (1)(2)

o More than 245 WCDMA operators have commercially launched the higher data speeds of HSDPA and more than 65 have launched HSUPA; (2)and

o More than 105 CDMA2000 operators have commercially launched the higher data speeds of 1xEV-DO and more than 55 have launched EV-DO Revision A. (1)

• We expect that CDMA-based device prices will continue to segment into high and low end due to high volumes and vibrant competition in marketplaces around the world. As more operators deploy the higher data speeds of HSPA and EV-DO Revision A and as manufacturers introduce additional highly-featured, converged devices, we expect consumer demand for advanced 3G devices to continue at a strong pace.

• To meet growing demand for advanced 3G wireless devices and increased multimedia functionality, we intend to continue to invest significant resources toward the development of wireless baseband chips, converged computing/communication chips, multimedia products, software and services for the

wireless industry. We expect that a portion of our research and development initiatives in fiscal 2009 will not reach commercialization until several years in the future.
• We expect demand for cost-effective wireless devices to continue to grow and have developed a family of Qualcomm Single Chip (QSC) products, which integrate the baseband, radio frequency and power management functions into single chip or package, lowering component counts and enabling faster time-to-market for our customers. While we continue to invest aggressively to expand our QSC product family to address the low-end market more effectively with CDMA-based products, we still face significant competition from GSM-based products, particularly in emerging markets.

• We will continue to invest in the evolution of CDMA and a broad range of other technologies as part of our vision to enable a range of technologies, each optimized for specific services, including the following products and technologies:

o The continued evolution of CDMA-based technologies, including the long-term roadmaps of 1xEV-DO and High Speed Packet Access (HSPA);

o OFDM and OFDMA-based technologies;

o Our service applications platform, content delivery services and user interfaces;

o Our MediaFLO MDS and FLO technology for delivery of multimedia content; and

o Our IMOD display technology.

In addition to the foregoing business and market-based matters, the following items are likely to have an impact on our business and results of operations over the next several months:
• We will continue to devote resources to working with and educating all participants in the wireless value chain as to the benefits of our business model in promoting a highly competitive and innovative wireless market. However, we expect that certain companies may continue to be dissatisfied with the need to pay reasonable royalties for the use of our technology and not welcome the success of our business model in enabling new, highly cost-effective competitors to their products. We expect that such companies will continue to challenge our business model in various forums throughout the world. For example, we expect that we will continue to be involved in litigation, including our ongoing disputes with Broadcom, and to appear in front of administrative and regulatory bodies, including the European Commission, the Korea Fair Trade Commission and the Japan Fair Trade Commission to defend our business model and to rebuff efforts by companies seeking to gain competitive advantage or negotiating leverage.

• We have been and will continue evaluating and providing reasonable assistance to our customers. This includes, in some cases, certain levels of financial support to minimize the impact of the litigation in which we are involved.

(1) According to public reports made available at www.cdg.org.

(2) As reported by the Global mobile Suppliers Association, an international organization of WCDMA and GSM (Global System for Mobile Communications) suppliers in their January 2009 reports.

Further discussion of risks related to our business is presented in the Risk Factors included in this Quarterly Report. Revenue Concentrations
Revenues from customers in South Korea, China, Japan and the United States comprised 32%, 23%, 11% and 6%, respectively, of total consolidated revenues for the first three months of fiscal 2009, as compared to 35%, 24%, 16% and 11%, respectively, for the first three months of fiscal 2008. We distinguish revenues from external customers by geographic areas based on the location to which our products, software or services are delivered and, for QTL's licensing and royalty revenues, the invoiced addresses of our licensees. Combined revenues from customers in South Korea, Japan and the United States decreased as a percentage of total revenues, from 62% to 49%, primarily due to an increase in the relative mix of license fees and royalty revenues from licensees in Finland, Taiwan and Canada and shipments of integrated circuits to CDMA device manufacturers with locations in Canada.

First Quarter of Fiscal 2009 Compared to First Quarter of Fiscal 2008 Revenues. Total revenues for the first quarter of fiscal 2009 were $2.52 billion, compared to $2.44 billion for the first quarter of fiscal 2008.
Revenues from sales of equipment and services for the first quarter of fiscal 2009 were $1.42 billion, compared to $1.70 billion for the first quarter of fiscal 2008. Revenues from sales of integrated circuit products decreased $254 million, primarily due to a decrease of $390 million related to lower unit shipments, mostly consisting of MSM and accompanying RF and PM integrated circuits, partially offset by an increase of $112 million related to the net effects of changes in integrated circuit product mix and the average sales prices of such products.
Revenues from licensing and royalty fees for the first quarter of fiscal 2009 were $1.09 billion, compared to $737 million for the first quarter of fiscal 2008. The increase in revenues from licensing and royalty fees primarily related to an increase in sales of CDMA-based products reported by QTL's licensees, driven by the continued adoption of WCDMA at higher average selling prices than CDMA2000. In addition, revenues from licensing and royalties in the first quarter of fiscal 2008 did not include any royalty payments from Nokia.
Cost of Equipment and Services. Cost of equipment and services revenues for the first quarter of fiscal 2009 was $755 million, compared to $783 million for the first quarter of fiscal 2008. Cost of equipment and services revenues as a percentage of equipment and services revenues was 53% for the first quarter of fiscal 2009, compared to 46% for the first quarter of fiscal 2008. The decrease in margin percentage in the first quarter of fiscal 2009 compared to fiscal 2008 was primarily attributable to a decrease in QCT gross margin relating to the net effects of changes in product mix and increases in reserves for excess and obsolete inventory concurrent with a decline in revenues. Cost of equipment and services revenues in the first quarter of fiscal 2009 included $10 million in share-based compensation, compared to $9 million in the first quarter of fiscal 2008. Cost of equipment and services revenues as a percentage of equipment and services revenues may fluctuate in future quarters depending on the mix of products sold and services provided, competitive pricing, new product introduction costs and other factors.
Research and Development Expenses. For the first quarter of fiscal 2009, research and development expenses were $604 million or 24% of revenues, compared to $511 million or 21% of revenues for the first quarter of fiscal 2008. The dollar increase was primarily attributable to a $76 million increase in costs related to the development of integrated circuit products, next generation CDMA and OFDMA technologies, the expansion of our intellectual property portfolio and other initiatives to support the acceleration of advanced wireless products and services, including lower cost devices, the integration of wireless with consumer electronics and computing, the convergence of multiband, multimode, multinetwork products and technologies, third party operating systems and services platforms. The technologies supporting these initiatives may include CDMA2000 1X, 1xEV-DO, EV-DO Revision A, EV-DO Revision B, WCDMA, HSDPA, HSUPA, HSPA+ and OFDMA. Research and development expenses for the first quarter of fiscal 2009 included share-based compensation of $69 million, compared to $57 million in the first quarter of fiscal 2008.
Selling, General and Administrative Expenses. For the first quarter of fiscal 2009, selling, general and administrative expenses were $413 million or 16% of revenues, compared to $389 million or 16% of revenues for the first quarter of fiscal 2008. The dollar increase was attributable to a $13 million increase in marketing expenses for MediaFLO USA, including development funds, marketing research and promotion, and an $8 million increase in employee-related expenses, partially offset by a decrease of $12 million in costs related to litigation and other legal matters. Selling, general and administrative expenses for the first quarter of fiscal 2009 included share-based compensation of $66 million, compared to $60 million in the first quarter of fiscal 2008.
Net Investment (Loss) Income. Net investment loss was $294 million for the first quarter of fiscal 2009, compared to net investment income of $173 million for the first quarter of fiscal 2008. The net decrease was comprised as follows (in millions):

                                                                 Three Months Ended
                                                         December 28,           December 30,
                                                             2008                   2007             Change
Interest and dividend income:
Corporate and other segments                            $          135         $          152        $   (17 )
QSI                                                                  -                      1             (1 )
Interest expense                                                    (3 )                   (7 )            4
Net realized (losses) gains on investments:
Corporate and other segments                                       (38 )                   71           (109 )
QSI                                                                  5                     11             (6 )
Other-than-temporary losses on investments:
Corporate and other segments                                      (388 )                  (57 )         (331 )
QSI                                                                 (4 )                    -             (4 )
Gains on derivative instruments                                      -                      2             (2 )
Equity in losses of investees                                       (1 )                    -             (1 )

                                                        $         (294 )       $          173        $  (467 )

The decrease in interest and dividend income on cash, cash equivalents and marketable securities held by corporate and other segments was a result of lower interest rates earned on interest-bearing securities. Other-than-temporary losses on marketable securities and net realized losses on corporate investments related primarily to depressed securities values caused by a major disruption in U.S. and foreign financial markets including a deterioration of confidence in financial markets and a severe decline in the availability of capital and demand for debt and equity securities.
Income Tax Expense. Income tax expense was $110 million for the first quarter of fiscal 2009, compared to $163 million for the first quarter of fiscal 2008. The effective tax rate for the first quarter of fiscal 2009 was 24%, as compared to 18% for the first quarter of fiscal 2008. In the first quarter of fiscal 2009, we recorded a tax benefit of $38 million related to fiscal 2008 due to the retroactive extension of the federal research and development tax credit. We also recorded a tax expense of $60 million in the first quarter of fiscal 2009 representing the increase in the valuation allowance related to deferred tax assets on capital losses existing at September 28, 2008 as a result of a reduction in our forecast of future capital gains. The effective tax rate for the first quarter of fiscal 2009 of 24% was higher than the expected annual effective tax rate of 22% primarily as a result of the net effect of these discrete items.
The estimated annual effective tax rate for fiscal 2009 is 13% lower than the United States federal statutory rate primarily due to benefits of approximately 23% related to foreign earnings taxed at less than the United States federal rate and 5% related to research and development tax credits, partially offset by the impact of the increase in valuation allowance related to capital losses of 9% and state taxes of approximately 5%.
Deferred tax assets, net of valuation allowance, increased from September 28, 2008 to December 28, 2008 primarily due to changes in unrealized marketable securities gains and losses. We can only use realized capital losses to offset realized capital gains. Based upon our assessment of when capital gains and losses will be realized, we estimate that our future capital gains will not be sufficient to utilize all of the realized and unrealized capital losses that were recorded through December 28, 2008. In fiscal 2009, we expect to provide an additional $435 million valuation allowance for the portion of deferred tax assets related to capital losses that we estimate are not likely to be realized. In the first quarter of fiscal 2009, we recorded additional valuation allowance of $199 million as an increase in other comprehensive loss. The remainder of the increase in the valuation allowance will be recorded as a component of the income tax provision for fiscal 2009, a portion of which was recorded in the first quarter. Significant judgment is required to forecast the timing and amount of future capital gains and the timing of realization of capital losses. Adjustments to our valuation allowance based on changes to our forecast of capital gains in future years are reflected in the period the change is made. Our Segment Results for the First Quarter of Fiscal 2009 Compared to the First Quarter of Fiscal 2008
The following should be read in conjunction with the first quarter financial results of fiscal 2009 for each reporting segment. See "Notes to Condensed Consolidated Financial Statements, Note 8 - Segment Information."

QCT Segment. QCT revenues for the first quarter of fiscal 2009 were $1.33 billion, compared to $1.57 billion for the first quarter of fiscal 2008. Equipment and services revenues, mostly consisting of MSM and accompanying RF . . .