Qualcomm Posts a Sharp Jump in Profit
Qualcomm Inc. said Wednesday that record demand for its wireless telephone technology helped it blow by expected quarterly financial targets and give executives reason to boost earnings and revenue estimates this year.
The San Diego maker of wireless products and chip sets reported net income of $241.3 million, or 30 cents a share, for its fiscal first quarter, a 73% hike over last year’s first-quarter profit of $139.2 million, or 17 cents a share. Sales grew 57% to $1.1 billion for the quarter ended Dec. 29.
Qualcomm, which pioneered the world’s second-most-dominant wireless technology, known as CDMA, has been at the forefront of developing the technology and chip sets needed for color displays, Internet e-mail connections, news, music and video on what is called third- generation, or 3G, cell phones.
“At a time when most wireless equipment companies have been really hurting and struggling to show growth, Qualcomm has clearly been one of the exceptions,” said John Bucher, an analyst at Gerard Klauer Mattison in Los Angeles.
The company said its earnings, excluding money-losing investments in emerging telecommunications companies world- wide, amounted to 42 cents a share, exceeding the 37 cents that Bucher and other Wall Street analysts had expected.
“We thought there may be an upside, but we thought it would be only a penny or two,” he said.
Results were released after the markets closed. Qualcomm ended the day at $36.69, down 27 cents, on Nasdaq. But in after-hours trading, shares rose as high as $38.58.
Qualcomm Chairman Irwin M. Jacobs said a key to increased demand are the emerging markets of China and India, both of which chose CDMA technology over the more prevalent GSM technology popular throughout Europe.
Jacobs said he was recently playing with video cell phones that use the company’s latest CDMA technology.
“They certainly capture your attention and that of everyone around you,” he told analysts in a conference call.
Executives said this quarter’s revenue should rise about 50% over that of last year’s second quarter, though it would be about 7% lower than the first quarter.
For the year, the company raised its earnings estimate to $1.34 to $1.39 a share, from its previous estimates of $1.15 to $1.20, excluding the investment division. Revenue should rise 28% to 33% on sales of 105 million to 112 million CDMA phones during the calendar year, though prices probably will drop 10%, the company said. Its previous sales estimate was for growth of 19% to 23%.
