some varying comments from analysts, including our new buddy Ed.
biz.yahoo.com
Qualcomm Shares Jump on Chip Outlook
Friday September 20, 9:27 am ET
CHICAGO (Reuters) - Shares of Qualcomm Inc. (NasdaqNM:QCOM - News) jumped 9 percent in preopen trading on Friday after the wireless technology company raised its guidance for cell phone chip shipments in its fourth quarter, citing strong demand.
Qualcomm's shares rose to $28.10 on Instinet from its $25.72 close on the Nasdaq on Thursday as the company dispelled fears of weak chip demand. The stock has fallen almost 50 percent so far this year.
"The positive scenario laid out at the analyst day (last May) appears to be coming to fruition, resulting in Qualcomm likely reaching the high-end of earnings guidance each of the last two quarters (of calendar 2002)," J.P. Morgan analyst Edward Snyder said in a research note.
Qualcomm owns most of the patents to Code Division Multiple Access, the dominant wireless technology standard in the United States and the second most commonly used technology in the world.
The company, like other telecommunications firms, has suffered from the sluggish economy and lower industry spending but its business has remained relatively strong because of its control over CDMA.
While the global cell phone market overall has been weak, CDMA markets, particularly in South Korea and Japan, have remained strong, helped by the popularity of new advanced wireless services that offer high-speed Internet access.
Any manufacturer who wants to make CDMA phones must pay Qualcomm royalties. Qualcomm also is the dominant manufacturer of CDMA phone chips.
Peter Friedland, wireless analyst with WR Hambrecht & Co., attributed the strong chip shipments to inventory buildups in preparation for holiday sales in the United States, accelerating CDMA subscriber growth in China, continued strong handset sales in South Korea and Japan and increased chip business from Motorola Inc. (NYSE:MOT - News), the world's No. 2 cell phone maker.
Morgan Stanley increased its fiscal 2002 earnings estimate by a penny following the news.
"Our confidence in our high-on-the-street fiscal 2003 estimate of $1.20 increases again," the brokerage firm said in a research note.
The San Diego-based company late on Thursday said it expects to ship about 20 million chips in its fiscal quarter ending Sept. 29, up 25 percent from the previous quarter and higher than its previous guidance of 18 million to 19 million chips.
Qualcomm also said it expects to ship significantly more than 20 million chips in the first quarter of fiscal 2003 ending Dec. 29.
The company has repeatedly said it expects a stronger performance in the second half of calendar year 2002 as Verizon Wireless and Sprint PCS Group (NYSE:PCS - News) roll out CDMA2000 1X advanced wireless networks.
CDMA2000 1X is Qualcomm's advanced technology that gives users access to high-speed wireless Internet connections via cell phones.
Still, Friedland expressed reservations about Qualcomm.
"Despite exceptionally strong near-term momentum in the chipset business, we still have lingering concerns regarding slowing growth in the key U.S. market, as well as the potential impact of Samsung's (KSE:05930.KS - News) development of its own 1X chipset," Friedland said. |
