Qualcomm posts higher quarterly profit, revenue

Sinead Carew

SAN FRANCISCO: Wireless technology company Qualcomm Inc. on Wednesday posted higher quarterly earnings as revenue rose 40 percent as demand grew for mobile devices including phones with video players and Web browsers.

Its shares rose 2.7 percent to $41.48 in Inet trading as the company gave investors a first-quarter outlook that was better than expected by analysts.

"The quarter was good. Outlook was conservative for the full year which is good and we like the first-quarter guidance," Deutsche Bank analyst Brian Modoff said. "I'd rather they start out conservatively (for the full year) and be able to move the numbers up rather than put a high bar up and set themselves up for disappointment."

Qualcomm expects fiscal first-quarter earnings of 36 cents to 38 cents a share, excluding certain items, on revenue of $1.67 billion to $1.77 billion.

On average, Wall Street analysts were expecting earnings of 35 cents a share on revenue of $1.66 billion, according to Reuters Estimates.

Net earnings rose 37 percent to $538 million, or 32 cents a share, for the fiscal fourth quarter ended Sept. 25, on revenue of $1.56 billion, in line with Qualcomm's estimates.

Qualcomm dominates the market for technology and chips in phones used in the United States and also sells chips and licenses for an advanced mobile phone technology that is emerging in Europe and other parts of the world.

Its shares rose 90 cents to $41.48 on Inet after finishing up at $40.38 on Nasdaq before the news.

The stock, which reached a year-high of $46.28 last month, has been boosted in recent months as it is viewed by many as the best bet to invest in high-speed wireless services.

But the stock had fallen since the news on Friday that six rivals including Nokia, Ericsson and Texas Instruments Inc. complained to the European Commission about its competitive practices.

"We plan to meet with the Commission very soon to begin the process of providing the facts that disprove the complaints," Chief Operating officer Steve Altman told analysts during a telephone conference call.

High-speed outlook

Altman said he expects fourth-quarter trends for strong growth of both advanced phones and less expensive models to continue to boost Qualcomm's chip and license sales in the current quarter, traditionally a strong quarter, and in 2006.

"There's a combination of things. With the holiday season that's definitely driving markets. Demand for both the low-end and the high-end, multi-feature phones is really what's driving the markets for us," he said in a telephone interview.

Qualcomm, which sells chips and technology licenses for phones based on CDMA and W-CDMA technology standards, said it expects 255 million to 270 million phones based on these technologies to ship in the calendar year 2006.

It expects the market for devices based on W-CDMA, which is becoming popular in Europe, to almost double to 86 million in 2006 from its 44 million estimate for 2005.

But 2006 average selling prices for handsets are expected to fall to $210 from about $215 in 2005 as sales in Latin America and countries such as India boost demand for cheaper phones.

Qualcomm expects 2006 earnings of $1.43 to $1.47 per share, excluding items such as 18 cents a share charges for stock option expenses, on revenue of $6.7 billion to $7.1 billion.