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Executives

Warren Kneeshaw – VP, IR

Paul Jacobs – Chairman and CEO

Steve Mollenkopf – EVP and Group President

Craig Barratt – President and CEO, Atheros Communications, Inc.

Bill Keitel – CFO, Principal Accounting Officer and EVP

Analysts

Brian Modoff – Deutsche Bank

James Faucette – Pacific Crest Securities

Simona Jankowski – Goldman Sachs Group

Maynard Um – UBS Investment Bank

Rod Hall – JPMorgan Chase

Mark Sue with RBC Capital Markets

Mark McKechnie – Gleacher & Company

Stacy Rasgon – Sanford Bernstein

Jonathan Goldberg – Deutsche Bank Securities

Romit Shah – Nomura Securities

Arnab Chanda – Roth Capital Partners

David Wong – Wells Fargo

Gus Richard – Piper Jaffray

Craig Berger – FBR Capital Markets

Alex Gauna – JMP Securities

QUALCOMM Inc. (QCOM) Definitive Agreement to Acquire Atheros Announcement Conference Call January 5, 2011 8:30 AM ET

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Qualcomm Announces Definitive Agreement to Acquire Atheros Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, this conference call is being recorded January 5, 2011. The playback number for today’s call is 1800-642-1687. International callers, please dial 706-645-9291. The playback reservation number is 35060578. I would now like to turn today’s call over to Warren Kneeshaw, Vice President of Investor Relations. Mr. Kneeshaw, please go ahead.

Warren Kneeshaw

Thank you (Gillette). Good morning everyone and welcome to our conference call regarding announcement of Qualcomm’s pending acquisition of Atheros. Today’s call will include brief remarks by Dr. Paul Jacobs; Steve Mollenkopf, and Dr. Craig Barratt, President and Chief Executive Officer of Atheros. In addition Bill Keitel, will join the question-and-answer session. An Internet presentation and audio broadcast accompany this call, and you can access them by visiting www.qualcomm.com.

We may make forward-looking statements relating to our expectations and other future events that are subject to a number of risks and uncertainties and these expectations may differ materially from Qualcomm’s actual results. Please review our SEC filings for a detailed presentation of each of our businesses and associated risks and other important factors that may cause our actual results to differ from these forward-looking statements. Before making any voting decisions with respect to the proposed acquisition investors are urged to read Atheros’ proxy statement and other relevant materials when they become available because they will contain important information about the transaction.

With that I would like to turn it over to Qualcomm’s Chairman and Chief Executive Officer, Dr. Paul Jacobs.

Paul Jacobs

Thanks Warren, and good morning everyone. Thanks for joining us. I am very pleased to announce our planned acquisition of Atheros, the company that many of you are well acquainted with. They are leader in connectivity and networking solutions and they have a strong track record of execution, growth and financial performance. Just to say this acquisition makes sense on a lot of levels. From a vision standpoint, we believe that communications capability will go into more and more devices in the world around us and that the phone will be used to interact with these devices.

From a strategy standpoint, we will continue to lead in technology through significant R&D investments and this acquisition allows us to profit from those investments across a larger base of devices. And from a tactical standpoint, we’ll have access to a strong team and a new set of technologies, partners, and distribution channels and will also be able to broaden our relationships with existing customers.

Now in terms of the specifics of the deal, we’ve entered into a definitive agreement to purchase Atheros for $45 per share in cash for an enterprise value of $3.1 billion. The transaction has been approved by the Qualcomm and Atheros Boards of Directors. And we expect the transaction to close in the first half of 2011. Atheros will become known as Qualcomm Networking & Connectivity or QNC and Craig Barratt will continue as President of QNC reporting to Steve Mollenkopf. We’re looking forward to working even more closely with Craig. Excluding amortization of acquired intangibles, we expect the acquisition to be modestly accretive to earnings per share in fiscal 2012, the first full year of operation. And we’ll finalize our estimates of the transaction’s financial impact as well as the accounting for the transaction on deal close.

Firstly, I am very excited about this acquisition. We’ve had a close working relationship with Atheros and I am confident that our teams will come together quickly and effectively. And now I’d like to turn the call over to Steve Mollenkopf for some specifics.

Steve Mollenkopf

Thanks Paul and good morning everyone. Thanks for joining us on the call. Our announcement today is an important step for our business. It is a clear indication of our strategy to move aggressively into silicon beyond cellular. We believe that it will expand our opportunities with new products, new customers, and new sales channels. It will enable us to grow a platform business in additional areas such as consumer electronics, networking and computing.

You’ve heard us talk about our vision around the convergence of mobility, computing and consumer electronics. Our announcements today should be viewed as a statement about our commitment to provide a complete set of solutions to address this trend, as it is clearly unfolding in front of us today. You have also seen us execute on our strategy for quite some time. We lead with technology and win by providing complete system solutions. This acquisition provides us a wider set of products and technologies to expand that strategy.

This acquisition will allow us to build upon our capabilities and add to our suite of best-in-class technology assets. Our strong portfolio of products historically focused on modems and integrated application processors for cellular will be supplemented with Atheros’ wireless LAN, Ethernet, Bluetooth, GPS, Passive optical networking and power line solutions. We are also excited about the fact that we are acquiring a proven leader with a strong existing product portfolio, mature sales channels, and outstanding team that like us clearly has a focus on execution.

This acquisition significantly expands our opportunities as a semiconductor provider. With this incremental set of products, channels, and customers, we can accelerate the extension of our technologies and platforms beyond cellular to computing, consumer electronics and networking, both home and enterprise. I would like to congratulate Craig and the rest of the Atheros’ team on their accomplishments. We have worked with Atheros for many years and know them well. They have built a strong organization and a very successful business. I am excited about today’s news and the opportunities this creates and I look forward to working with the Atheros’ team.

With that I will now turn the call over to Craig.

Craig Barratt

Thank you Paul and Steve. I’d just like to add a few comments before we turn it over to Q&A. As Paul and Steve mentioned, the two companies have had a long standing successful working relationship. We are very familiar with Qualcomm’s capabilities including their technology leadership and their commitment to execution. We have the same focus and strong track record of success at Atheros. We have similar engineering cultures and approaches to the marketplace. As an example, we have successfully collaborated with Qualcomm on reference design projects in the mobile space for years.

I agree with Paul that there is a strong alignment between the teams and I am looking forward to hitting the ground running. Clearly this has been an exciting start to the New Year for Atheros. The combination of the two companies is a very exciting opportunity for our stockholders, our employees and our customers. Bringing together these likeminded teams and their best-in-class technologies will allow us to offer a broad range of system solutions to our customers.

Personally, I’m excited about the growth opportunities for the combined businesses as well as Atheros’ new role upon close as Qualcomm Networking & Connectivity. With that I will hand the call back to Warren.

Warren Kneeshaw

Thank you Craig. Operator, we are ready for questions.

Question-and-Answer Session

Operator

(Operator Instructions) One moment please for your first question. Your first question comes from the line of Brian Modoff with Deutsche Bank.

Brian Modoff – Deutsche Bank

Hi guys congratulations on the merger. Question for you. Atheros’ has some non-Wi-Fi based revenues. What are your plans with that area of the company, are you planning to keep the entirely Atheros or would you perhaps look at selling this off to other vendors that might be able to leverage more efficiently? Thank you.

Steve Mollenkopf

Brain, this is Steve. Thank you first of all. The – no, actually our view at this point is really to leverage the basket of technologies that Atheros brings to us and really use that in addition to the channel, kind of technologies and channels are both important here, to grow our ability to provide platforms I think into new segments really. So I really think more we’re in the process of continuing to develop those basket of technologies versus would let down [ph].

Brian Modoff – Deutsche Bank

And then real quick also Steve, when would you have combination chips available in the market when you’re combining you’re – already have your GPS, you have Bluetooth, now you have obviously Wi-Fi, when you think you would have combo chips into market for smartphones and tablets. Also would you – would you have another strategy perhaps embedding the Wi-Fi technology with your modems or how do you see that strategy, you know do you plan to embed and if you plan to do combos, when would you have combos available?

Steve Mollenkopf

Well Brian, I think really no change in strategy, I think for either of the entities, we very much believe based on what we’ve announced already that integrating in products is actually very beneficial at the platform level. And in fact our existing plans for the 8960 and our existing wireless LAN product lines that are based off of our internal Qualcomm internal solution. We’ll continue to move forward and we’re very pleased with how that’s going.

In addition though, you get access to connectivity products and even in the case of wireless LAN you get access to connectivity that is actually optimized for markets outside of mobile. And I think overtime you’ll start to see some scale synergy, as well as you’re just engaging in more of the market, I think you become more of a harden solution that way. I think there is some real – because you’re engaging with many, many markets, you tend to be able to lead more in the individual markets. It’s really a scale advantage. But I don’t think there is – we’re thinking of a change in strategy either from the platform level or how we address the individual products, and maybe I could ask Craig if he could give his comments as well.

Craig Barratt

Yes Brian, I think we really have a shared vision about expansion together into a variety of new technologies and segments. So it’s a lot more than just about Wi-Fi. As you know Atheros already has a much broader portfolio of connectivity technologies really driving the connected home, driving consumer devices. And in many of these markets or many of these segments are separate from the cellular markets. So it’s more than Wi-Fi, its more than cellular platforms. It’s really about driving a broad portfolio of technologies into additional segments.

Brian Modoff – Deutsche Bank

Okay. All right guys. Good luck. Thank you.

Operator

Your next question comes from the line of James Faucette with Pacific Crest.

James Faucette – Pacific Crest Securities

Thank you very much. First in terms of the impact from the combination of the two companies, can you talk a little bit about Steve, maybe where you see some opportunities or leverage just the product portfolio itself particularly from a cost savings perspective. And then secondly, from a strategic standpoint, just pulling on kind of where Brian was headed. Where do you – where should we be thinking about the best opportunities to get the leverage from the combination of the two companies, is this into the traditional handset business where Qualcomm has always played or should we be thinking more about the opportunity outside of handsets and areas like tablets or even smart meters [ph] etcetera. Thank you.

Bill Keitel

Good morning James, it’s Bill Keitel. On the opportunities beyond the technology and the channel as Steve mentioned. We’re very impressed by Atheros’ capability and position in their channel. We have built in some good synergies into our forward forecast. It comes more about from how we see the development aligning rather than an immediate impact to one or another organization. So in effect the synergies that we’re seeing are more so of a – with the combination we expect to be hiring less people than what we otherwise would have done.

But still the primary synergy we’re seeing here is, as Steve said it’s the products, the technologies and expansion of our opportunities here as we go forward.

Steve Mollenkopf

That’s right. This is Steve, James. The – we have very similar – I think it’s a very complementary technologies actually. And we see a lot of the benefit actually about growing our top line as well as our ability to really meet this strategic opportunity that we’ve been talking about where we think what’s happening really is that with the growth of smartphones and really mobile OSS [ph], you’re starting to see I think a very broad change in the way computing happens not just in the phone but also in a lot of adjacent markets which we think are going to have similar platform requirements to the phone.

However when you go into those requirements, you go into those new areas I think there is going to be a need for different channels as well as a different basket of goods in terms of technologies in order to do that. Now we get I think a number of those things covered with this acquisition, and we really start – we start with the position of a leader which we’re very excited about. So it’s very much a continuation of the same trend that we’ve been talking about. We think it’s going to expand into different markets. It will help us of course in our home market of cellular, but we really look at it more as this is a cellular expanding into other markets and as we go, we’re going to need new assets and new people to help us get there.

Operator

OK, moving onto the next question. Your next question comes from the line of Simona Jankowski with Goldman Sachs Group.

Simona Jankowski – Goldman Sachs Group

Good morning and thank you very much. Steve I think at the Analyst Day, November you had talked about having a Snapdragon product this year on 28-nanometer which was going to innovate connectivity including Wi-Fi. So just curious if that’s still on track and would that include your own Wi-Fi or the Atheros solution. And then just to relate it to that point I think from a technology perspective integrating Wi-Fi with the chipset is a pretty significant engineering challenge. So how much visibility do you have on whether integrating Atheros Silicon will make that challenge any easier than it has been so far?

Steve Mollenkopf

Well, no change actually to our announced plans on 8960 or even our standalone wireless LAN plans that we have announced and have been executing on for some time. So we will continue to work on that solution and it’s on track and we’re quite pleased with that approach. I think long-term there is an opportunity to merge the roadmaps. However I think it’s important and maybe I could ask Craig to comment a little bit more on this. It’s important to understand that wireless LANs are very broad category of technologies. And our particular implementation that we have today is focused really on that integration aspect that you mentioned, really optimized for using against our chipset.

But it’s a very broad product category. Maybe Craig you could expand on that a little bit, maybe help explain.

Craig Barratt

Sure, that’s right. Certainly the Wi-Fi market is really quite broad in terms of product types and the specific channels and segments. And the mobile market based on cellular platforms clearly has been growing strongly. One thing I should make clear is as you know Atheros and Qualcomm have partnered together for many years. And this announced transaction is really has nothing to do with the Wi-Fi capability on Qualcomm’s side having any issues or challenges on mobile platforms.

It is so much more about driving Wi-Fi into additional channels, additional segments. To talk about Wi-Fi technology there is necessary in networking platforms like gateways and routers, set-top boxes and TVs in consumer platforms as well are really very, very different to those in mobile devices. And that requires a significant additional level of capability and resources to address those channels and segments. And so just as Steve mentioned, it’s really about adding a broad horizontal capability in a set of new technologies including Wi-Fi addressing a broad set of channels in addition to getting that much more capable in the vertical platforms that Qualcomm has so capably grown and delivered in the mobile and cellular markets.

Operator

And your next question comes from the line of Maynard Um with UBS.

Maynard Um – UBS Investment Bank

Hi thank you. Can you just talk a little bit more about the new markets and the synergies? I understand there is a connected home, but it doesn’t really strike me is that getting into TVs will help to drive QCPs. So I’m trying to understand the synergies that between the two companies. What does Qualcomm bring to Atheros? What does Atheros bring to – I understand what Atheros brings to Qualcomm but in particular I guess, how does being under the Qualcomm umbrella help Atheros as well because I am just trying to understand how there are synergies between the two businesses in terms of overlap of cross selling and things like that. And then if you can also just talk about the process of the acquisition, was there an open auction for the company? Thanks.

Steve Mollenkopf

Well Maynard, this is Steve. In terms of synergies, one thing that I just want to try to talk a little bit about our view of what’s happening in the market. First of all, we think that the platform strength of smartphones is really going to generate an enormous pressure on a number of adjacent markets to adopt a similar type technology platform. And you’re already starting to see that in the case of tablets where the tablets instead of using technology which historically may have come from platform technology which may have historically come from the PC world. It’s really pulled the phone world up including bringing technology providers and application suppliers from that world.

As we start to drive that strategy which has been a stated strategy for some time, we start to encounter really two areas that we think are addressed by this acquisition. The first one is that you start to encounter more technology that you need to connect two different things than you need to connect to in the phone in the case of – you know we would kind of broadly call that networking or connectivity and this is really building of what Craig said with an example. The wireless LAN that you might need to support a platform play in a tablet maybe different than what you use for a handset.

And as we do that we either have to invest in that or we need to partner. And so we obviously know which direction we went there. We think there is going to be a lot of momentum in other markets in a lot of places where people are going to want to have that same smartphone experience but throughout their entire daily life. And I think it’s going to really require us to add a larger platform of goods and technologies that the Atheros team has. In addition, for us to grow a platform business outside of our traditional customer base, you need to have I think a mature and well operating sales channel. And the ability really to make money at doing that and we really have been impressed over the years as we’ve worked with the Atheros team as how they are able to manage their channel.

And so I think you get really a different channel or different set of technologies and you’re doing that at a time when the industry is changing quite a bit. And you do it from I think a leadership position instead of having to run and catch up. So that’s really how we view it.

Operator

Your next question comes from the line of Rod Hall with JPMorgan Chase.

Rod Hall – JPMorgan Chase

Yes, thanks for taking my question. I’ve just got a couple of quick ones. One is with regards to royalty streams, I wonder if Atheros was a pretty early mover in Wi-Fi. So if you could just comment on whether if any of the intellectual property that you’re getting there, that would generate ongoing royalty streams. And then I mean the second question that I had is, you’re talking a lot about connectivity in these adjacent markets, do you got ambitions and does this indicates some sort of a strategy to move beyond just productivity though maybe leverage your application processor platforms into some of these other markets, I mean TVs now or basically, computers themselves. So I wondered if you can just comment on what the opportunity in those adjacent markets might look like.

Steve Mollenkopf

Well so to comment on the IP, this acquisition is primarily focused on products and new distribution channels, new partnerships to the extent that we do licensing in Qualcomm tends to be portfolio licensing, so that encompasses from the all the patents in our portfolio.

Rod Hall – JPMorgan Chase

Okay, Paul, could you just comment on whether – does that add to that portfolio so that you would potentially be able to get back more from it or not really very much?

Paul Jacobs

Yes, it just – it adds to the portfolio. There is more IP in our portfolio but we generally do full portfolio license. If you look at our model overtime, every time we’ve added a new technology. It’s not like we’ve gone back to the market and asked them okay, here give us a little bit more, a little bit more each time. It’s generally the way that we work is as we setup licensing deals with our partners and say you get whatever we create. So obviously that’s a general statement and there are some specifics that are different. But generally I would say this is not intended as an incremental licensing opportunity.

Rod Hall – JPMorgan Chase

Okay.

Craig Barratt

Rod, this is Craig. I’ll take the second question. Just as Steve reflected in his previous answer, the evolution of mobile and cellular technology is really starting to outstrip what’s necessary in many of these other segments and channels as we see in the connected home. So we just see it as a tremendous opportunity to leverage those technologies which are now being so successfully deployed in mobile devices like tablets and smartphones into other channels and segments like the connected homes.

The other mega trend which is really important is there is simply more and more connected devices all seamlessly interconnected and so having a common set of technologies that can be used to drive media and content between multiple devices throughout the home whether its wide area connections or whether its local area connections, we think there is an important trend over the next several years which a broader portfolio of technologies will allow us to address very successfully.

Rod Hall – JPMorgan Chase

Yes, I guess I was just wondering if Snapdragon in-depth selling into some of these adjacent markets, we were thinking about Snapdragon as clearly drilling into tablets and handsets today, but does Snapdragon start selling into cameras and TVs and all kinds of other connected devices overtime and you guys minds.

Craig Barratt

Absolutely, I think that’s absolutely the vision.

Rod Hall – JPMorgan Chase

Yes.

Craig Barratt

And we actually believe that the market is moving very rapidly towards bringing those type of technologies and really the expectation that the applications that you run on your phone are going to be running in many, many places that you interact with. And I think that’s a very, very powerful trend in the industry and we’re going to try to accelerate it to the greatest degree possible.

Rod Hall – JPMorgan Chase

OK. Thanks a lot guys.

Operator

Your next question comes from the line of Mark Sue with RBC Capital Markets.

Mark Sue with RBC Capital Markets

Steve or Craig, recognizing that it’s early, are there some thoughts on the cost and power savings which can be passed down to your customers, once you do have a fully integrated solution that integrates Atheros. And then Bill quickly on your thoughts on accretion, how we might get there and what are the most considering that it does seem like it’s going to be two separate paths for quite some time. Should we also expect some cost synergies in addition to the revenue synergies?

Steve Mollenkopf

Yes, I’ll take the first one. We talked a bit about how some of the advantages of integration at our Analyst meeting. And we will not be – nothing will change in terms of that regard. It’s probably a bit too early for us to try to set an expectation about how we can deal with that. I would say one think though that because of our combination and the fact that we tend to – through Qualcomm and the systems business tend to drive maybe a little faster to the advanced nodes, it probably provides a bit more of leading edge access to some of the other business. But it’s really too early for us I think to set an expectation there.

Bill Keitel

Mark, on the accretion question, yes there will be cost synergies. We expect that to come more about from the opportunities we’ve seen working together thus far with Atheros from a reduction of what we would otherwise be adding into Qualcomm. So I think as you know, we didn’t give specific guidance beyond fiscal ‘011 although we did say that we are – our internal plans have double-digit growth both in the QCT and QTL over the next five years. And so for fiscal ‘012 our internal plans at this point, we’re seeing with this acquisition an increment in revenue and a reduction in the cost profile that we otherwise we’re seeing.

Mark Sue with RBC Capital Markets

Okay, thank you and good luck gentlemen.

Operator

Your next question comes from the line of Mark McKechnie with Gleacher & Company.

Mark McKechnie – Gleacher & Company

Great, thanks and congrats to both companies on the merger here. Lot of the good questions have been asked, but Atheros’ core competency. They can – getting RF and to run on digital CMOS. Maybe for Craig and/or Steve, do you see any application of that technology within the Qualcomm chip roadmap for the cellular applications or is that little too far off to think about?

Craig Barratt

Mark, this is Craig, I mean that technology capability which Atheros has very successfully applied in our technology areas I think has been well available and Qualcomm I think has a very similar capability that they have being applying in the cellular markets. Both teams I think are going to be very focused on leveraging common technologies and also driving integration and of course doing that on a CMOS based technology is really been the bread and butter for both companies for many years.

Mark McKechnie – Gleacher & Company

Great, that helps. Thank you.

Operator

Your next question comes from the line of Stacy Rasgon with Sanford Bernstein.

Stacy Rasgon – Sanford Bernstein

Hi guys, thanks for taking my question. How do you feel about your complete portfolio now post the acquisition. And are there any other areas that you might be looking to augment as well?

Steve Mollenkopf

Stacy, this is Steve. Actually we feel very, very good about where we’re sitting both from a technology perspective as well as a channel perspective. And also I think we’re going to learn from the Qualcomm side. We’re going to learn a lot about some markets that we have just started to engage with. So I think it’s really going to be I think a flow back and forth in terms of learning. In terms of technology, I think we’re going to continually be looking at how we’re going to need to continue to invest in the business to continue to grow it as we would at any time even if we hadn’t had this call. So we continued to make drive the business by investing in technology and delivering that in a way that other people, the people probably can’t because of our scale.

So I don’t think anything really changes there but we’re certainly in a better position today than we were before.

Stacy Rasgon – Sanford Bernstein

Got it. And one other quick housekeeping question. You said that Craig you’ll be reporting to Steve. Does that imply that QNC is going to be subsumed within QCT or will it be split out? And if it’s subsumed, how is that going to impact the reporting of things like MSM shipments in QCT margins and the like?

Bill Keitel

Stacy, this is Bill. For our external reporting given the strong similarities in Atheros and QCT and the fact, he will report to Steve. It will be segmented reported within QCT.

Steve Mollenkopf

And I’d say also just from an industry perspective, we thought it was important to maintain one unified voice in terms of how we interact with the industry and we really have done that under the QCT name for a long time. And for example, how we integrate or how we deal with the GSA and the SIA and a number of the suppliers I think it’s important for us to maintain a unified. This is Qualcomm’s semiconductor business. It’s just I think grown in terms of capability and state of ambition.

Stacy Rasgon – Sanford Bernstein

All right, and the only reason I asked is that you know how people always have a relatively hyper focus on the QCT margin, I mean this would be dilutive to QCT margins I would assume once its integrated.

Craig Barratt

Yes Stacy, Atheros has operated at a bit lower gross margin and operating margin than it has QCT. But as we said we see this accretive to fiscal ‘012 and beyond.

Stacy Rasgon – Sanford Bernstein

Absolutely. Just people always focus and I just wanted to check. Thank you guys.

Operator

Your next question comes from the line of Jonathan Goldberg with Deutsche Bank.

Jonathan Goldberg – Deutsche Bank Securities

Hi good morning.

Steve Mollenkopf

Hi.

Jonathan Goldberg – Deutsche Bank Securities

I’m going to heather [ph] I guess, this is not the first time you two have considered combining, you know if you thought about this a few years ago, what’s changed today and what gives you greater confidence that you are stronger together, what’s new here and how does that affect, how it’s going to integrate the two companies? Thanks.

Steve Mollenkopf

Jonathan, this is Steve. We’ve had I think a long standing integration relationship as Craig mentioned. We’re the two teams that worked together to deliver products on a common platform which tends to have been associated with the MSM. So I think we have a very strong familiarity with each other. And I think actually strong affinity both technically and personally. So I think at this point in terms of timing, it’s really for us, as we see the industry changing pretty rapidly as per the strategic discussion that we had earlier and we thought this is the time really to create a leadership position in the space of that change and I think it’s very good timing for us.

Paul Jacobs

I just wanted to jump in there as well. I think compared with a few years ago Atheros now has much more substantial scale and a much more broader portfolio of technologies. And I think the trend that we see out there as I mentioned earlier is just as ever growing trend of more and more connected devices that we use and we use throughout the home and work. And putting those two things together I think makes this acquisition look that much more exciting for us strategically.

Jonathan Goldberg – Deutsche Bank Securities

Great, thank you and good luck.

Operator

Your next question comes from the line of Romit Shah with Nomura Securities.

Romit Shah – Nomura Securities

Yes, hi. You guys have not done an acquisition of this size as far as I know. Can you just discuss the – you know your execution strategy for maintaining the relationships on the PC and networking side where previously you haven’t had a presence and presumably there is some uncertainty today. Thank you.

Steve Mollenkopf

Sure, this is Steve. Couple of side, on the internal side, product delivery side, it’s as we said, it’s really more of an extension of the existing integration relationship that we’ve had and as we mentioned earlier, a lot of the technologies are complementary. So it’s probably one of the – there are number of topics that don’t come up when those issues hit. The other side is remember too is in addition to having a technical integration relationship, we have had to coordinate within the channel and across common sales accounts in the past and in fact that’s one of the reasons why I think some of the sales teams know each other quite well and it was fairly easy to meet the folks.

So I think there is certainly opportunities there to make that better but we’ve had to establish a lot of these working relationships throughout the years anyway. And also I should mention too that Craig is going to continue to be around and we’re very excited about that and I think it’s a key component of our integration strategy.

Operator

Your next question comes from the line of Arnab Chanda with Roth Capital.

Arnab Chanda – Roth Capital Partners

Yes, question for Craig. It seems like you are just on the cusp of getting success in some of the new devices like smartphones and tablets. What was the genesis of selling the company at this point? Thank you.

Craig Barratt

I think it’s a good question. Looking at Atheros’ long-term strategic goals we just see an ever increasing intersection with several key technologies. One of course is cellular and the evolution towards 4G. This is just a huge trend of more and more devices and not just voice and data used in smartphones but ultimately machine-to-machine applications, just so called internet of things and if I look out five or more years having that capability is really critical. Also there are capabilities in application processes, media processing and software depth and capability that I think is much more challenging for a smaller company like Atheros to really be world class app. And so when we look at the vertical platform capability of Qualcomm, the horizontal channel that we can provide across a variety of segments. And really the phenomenal capability of the combined technology of the two companies, it’s frankly just compelling. And it really accelerates a lot of our strategic objectives.

Operator

Your next question comes from the line of David Wong with Wells Fargo.

David Wong – Wells Fargo

Thanks very much. Could you give us some idea of what percentage of Atheros’ revenues are not Wi-Fi related. And similarly the percentage of the consumer revs that are wireless handset related?

Craig Barratt

This is Craig. We actually – Atheros’ in its public reporting actually does not do a breakout by technology. To be clear, the breakout that we do provide is in out three main channels. So that’s the networking channel, the consumer channel and the computing channel. So historically the networking channel, that’s mainly retail products, enterprise and service provider products, things like gateways, routers and so on. Historically that’s been a bit of 50% of our revenue. The PC business roughly computing platforms primarily has been around 20% of our business. And the consumer area that contains not only mobile phones but also gaming devices, digital cameras, eBook readers, the whole variety of consumer devices. That’s been grown quite rapidly and that makes up the high 20% range. And that’s the split that we report by channel.

David Wong – Wells Fargo

Okay thanks, one other quick one. I think you guys mentioned Qualcomm and Atheros were partnered in the past. Have there ever been an IP sharing arrangement. Did any of Atheros IP or circuitry currently in any Qualcomm products?

Craig Barratt

To-date the partnership we’ve had is actually being more of a reference design relationship. It’s been extensive. We have been working together closely for I believe for five years, but this is doing silicon – each company is providing chips on a common hardware references on. So there is no IP sharing, albeit, we have done a lot of work to do software integration so that the time to market for our joint customers can be accelerated. And that has allowed the teams to really cooperate closely over the last several years.

David Wong – Wells Fargo

Thanks so much.

Operator

Your next question comes from the line of Gus Richard with Piper Jaffray.

Gus Richard – Piper Jaffray

Yes, thanks for taking my question. Congratulations, I think the merger is brilliant. Just quickly, Craig do you see the cellular technology is a home networking, and sort of any thoughts on you use Tensilica and MIPS and Qualcomm’s, do you think you are going to migrate over to ARM?

Craig Barratt

So taking both of those questions, just as we said earlier and I think as Steve reflected earlier, I think cellular technologies will be pervasive in many new applications. And so around the home we not only see many media devices in the home being the other end of the connection for the mobile phone or tablet, delivering media and content from the device, but we also see LTE technologies in the future being used as backhoe for example into devices in the home.

So you could imagine gateways back hold with LTE clearly sales to flip things around providing more capacity within the home or also become – will become more and more integral to the fabric in the home. And ultimately as we have reflected also the overall trend with the internet of things many more interconnected devices in the home, many of those will use local area technologies. Some will use wired [ph] technologies provided we have the right level of technology and capability to enable those. With regards to your specific question about process of course I think both companies have a great deal of experience with a variety of architectures. At Atheros, we use MIPS and Tensilica and clearly as we look at the roadmaps and so when I think we will address that question overtime, I think both companies even on a combined basis will continue to have a strong capability in multiple underlying technologies.

Operator

Your next question comes from the line of Craig Berger with FBR Capital Markets.

Craig Berger – FBR Capital Markets

Thanks so much for taking my question and congratulations. For Qualcomm maybe Paul or Steve, it sounds like you guys want to get more aggressive in some of these non-Wi-Fi non-cellular technologies. Do you plan on stepping up your investments in that area or diverting other cost reductions from Atheros into those areas? What technologies might you still want to get into and how aggressively you’re going to be pushing into China and other areas? Thank you.

Steve Mollenkopf

Well, this is Steve. I’ll take and Paul, please jump in as well. I think we definitely see it the way that you characterize, as we see this as a big opportunity to grow the business outside of the home space. As Bill characterized, we’ve really had a plan and this helps us in terms of developing some of that plan. So therefore we don’t have to invest as much as maybe what we as we thought and Bill talked about some of this forward-looking synergies.

As we start to grow those businesses, it is conceivable that we’ll continue to need to invest and as we would in any case when we go into new business areas. So you know we had an opera, a plan to expand the business as per the strategic discussions that we’ve had. And this is I think obviously a very big step in doing that and we will continue to invest as we need to as we’ve always done actually to grow the business.

Paul Jacobs

This is Paul. So I mean if you look back at some of the presentations we’ve been making recently particularly, say at the Analyst Meeting this year and last year, we really have started to migrate the vision where we think the industry is going to one, where wireless is going to be an enabling technology. It’s going to be embedded into a lot of things. The phone is going to act as an interface for people into those other devices. And so we’ve been on this path for a while, we’ve been planning this and I think that this is a vision and a direction that’s got a lot of legs to it. So we are going to continue to invest into this area and we’re going to try and drive the future of this evolution.

Craig Berger – FBR Capital Markets

Just as a follow-up. Can you just remind us your desires or uses of cash between dividends, buybacks, future acquisitions, other. Thank you.

Paul Jacobs

So we’ve been I think pretty aggressive about dividends and buybacks, return of capital to shareholders. We don’t have any other acquisitions that are of this size that are on the plate. So but I never say never. So things going to happen. I will say it is great to be able to use the strong balance that we have, one question that hasn’t come up at this stage, we see this acquisition being primarily funded with offshore cash. So that’s also a nice thing. That’s typically not available for dividends and buybacks.

Operator

And your final question comes from the line of Alex Gauna with JMP Securities.

Alex Gauna – JMP Securities

Well thank you, let me close it out by also saying congratulations. I was wondering if in a forward-looking sense in areas of cooperation on the client side or consumer side, are there any particularly new thrust coming out as in the one-by-one N and two-by-two N and some of those informing [ph] capabilities where there are some particular optimism in terms of growing your share in that category or is it maybe in the Bluetooth combo type of chip I know you’ve had some recent announcements. And then also I am wondering about the Metro Wi-Fi footprint that Atheros has and how important that might be for Qualcomm in accelerating that initiative that I know has been underway for a couple of years as well.

Craig Barratt

Alex, this is Craig. Atheros has I think a broad leadership in many of the Wi-Fi categories and this is back to our earlier point that Wi-Fi has many different feature requirements and different technology requirements. So I think we really believe overtime that more and more advanced Wi-Fi features will become important in high performance platforms like tablets and other devices or as you point out migrations from single stream 11N to high order solutions will become more and more important. And of course there are future major technology transitions in Wi-Fi coming up with technologies like 11AC, 11AD and all of these will have a different lifecycles in every one of the channels and segments we talked about.

And so this is where I think having scale of resources and technology capability will be very important. You commented about Metro Wi-Fi I think is important. We believe as cellular technologies migrate towards 4G, we think there will be even more significant part of the business models of carriers that will involve local area offload. And so by having seamless and high performance offload capability in those next generation networks will be important. And I think that’s another case we are having both a capability of both ends of that link for Wi-Fi and of course a strong platform capability on the device side will be ever so more important.

Alex Gauna – JMP Securities

Thank you. Congratulations again.

Operator

And at this time, we reach end of the call. I would now like to turn the call back over to Dr. Jacobs for any remarks.

Paul Jacobs

Well I want to thank everybody for joining us. Obviously we’re very excited by the acquisition as I said earlier, it’s really an expression of a vision that’s been evolving inside Qualcomm for a while. And obviously we’ve spend a lot of effort over the past decade or more spending R&D dollars, putting new capabilities into the cellular devices, now we see those capabilities going out into all sorts of other types of devices.

And so in Atheros, we’re combining with a very strong team that’s executed extremely well and we see this great opportunity for growth together, I mean very much accelerates our expansion beyond cellular products as the industry is moving, in that direction and it allows us to bring together set of complementary technologies to really provide the system solutions that we’re known for. So think the two companies together we’re going to continue to drive our existing business model really leading in technology, innovation, focus on execution to performance, specifications, and schedules and really continuing to work very, very closely with increasing set of partners.

And I just want to say to the Atheros team we are really looking forward to working together even more closely. And to all of you that are on the call, thanks very much for joining us.

Operator

Ladies and gentlemen this concludes today’s conference call. You may now disconnect.

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