Qualcomm's Compliance With Foreign Business Law Called Into Question

Qualcomm announced Wednesday that the U.S. Attorney office in San Diego and U.S. Department of Justice have opened a preliminary investigation regarding the company’s compliance with the Foreign Corrupt Practices Act (FCPA).

The FCPA outlines accounting transparency requirements for U.S. companies doing business abroad, and also prohibits bribing foreign officials to maintain or get new business.

Qualcomm made note in its quarterly filing with the SEC that the investigation had been opened on January 27. The company’s chairman and CEO Paul Jacobs assured analysts and investors Wednesday that, despite speculation, Qualcomm has complied with all foreign business requirements.

"We believe we are in compliance with the requirements of the FCPA, and we will continue to cooperate with this investigation and look forward to resolving this matter," said Paul Jacobs, Qualcomm's chairman and CEO, during the company’s first quarter earnings conference call Wednesday.

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Qualcomm did not respond to a request for further comment.

Legal dealings aside, Qualcomm announced a record-breaking quarterly revenue, driven by a surge in demand for smartphones worldwide. An increase in 3G and 4G networks also gave the company a boost, as smartphones running on these networks are more likely to leverage Qualcomm architectures.

The chip maker reported a quarterly revenue of $4.68 billion, marking a 40 percent year-over-year growth compared to the $3.35 billion it reported during the first fiscal quarter in 2010, and a quarterly net income of $1.40 billion. Qualcomm said it sold 156 million of its MSM chipsets during the three-month period.

Jacobs cited smartphone demand, China’s expanding wireless subscriber base, and increased 3G and 4G adoption in tablets as drivers for Qualcomm’s continued growth into the next quarter.