Qualcomm Posts Rise in Profit, Sales; Warning Pulls Down Stock

Qualcomm Inc., a major manufacturer of chips for mobile phones, said Wednesday that profit in its fiscal first quarter rose 46% but added that it would fall short of expectations for the current quarter -- news that sent its stock down more than 6%.

Although the San Diego-based company’s earnings for the quarter ended Dec. 26 exceeded analysts’ consensus estimate by 3 cents a share, its outlook for the fiscal second quarter disappointed investors.

Shares of Qualcomm fell $1.55 to $41.07 on Nasdaq, then declined an additional $2.59 in after-hours trading.

Qualcomm earned $513 million, or 30 cents a share, up from $391 million, or 24 cents, in the same period a year earlier. Revenue climbed 15% to $1.3 billion.

Fiscal second-quarter profit, however, excluding Qualcomm’s investment unit, will be 25 cents to 27 cents a share, Qualcomm said in a statement. That’s below analysts’ consensus estimate of 30 cents in a survey by Thomson First Call.

The company predicted that revenue would be $1.35 billion to $1.45 billion, falling short of analysts’ consensus estimate of $1.49 billion.

Qualcomm designs and produces chips based on a technology the company developed called CDMA that is widely used in the U.S. and certain foreign countries.

“In the December quarter, demand for CDMA handsets in China, India and Korea was a little bit weaker than expected, which affects the current quarter,” said James Faucette, an analyst at Pacific Crest Securities in Portland, Ore.

“In December, India and Korea in particular bounced back, just not in time to help the March quarter,” Faucette said.

Qualcomm doesn’t book royalties until units are shipped, generally in the quarter after orders are made.

Sales of, and royalties from, CDMA-based phones are set to take off dramatically, Faucette said.

About a quarter of the world’s handsets use some form of CDMA, but that is expected to skyrocket to around 80% in the next four to five years, he said.