Qualcomm Says Net Soared 46% In Its 1st Quarter
By DON CLARK
Staff Reporter of THE WALL STREET JOURNAL
Global demand for cellular phones helped Qualcomm Inc. record a 46% jump in profit for its fiscal first quarter and increase its financial forecasts for the full year.
The San Diego company, which invented one of the major digital wireless formats, gets revenue from selling chips as well as royalties from other companies that make chips or cellphones. Qualcomm's technology -- known as CDMA, for code division multiple access -- is widely used in the U.S. market and several foreign markets.
Qualcomm said net income for the fiscal period ended Dec. 28 was $352 million, or 43 cents a share, up from $241 million, or 30 cents a share, a year earlier. Excluding results from an investment unit called Qualcomm Strategic Initiatives, or QSI, per-share earnings would have been 51 cents, topping analysts' average estimate on that basis of 48 cents a share, as reported by Thomson First Call. Revenue rose 13% to $1.24 billion from $1.1 billion.
QSI makes investments around the world in an effort to promote Qualcomm's CDMA technology. The unit has posted recent losses, largely because of problems at a Brazilian wireless-service provider known as Vesper. QSI sold that company last month.
Irwin Jacobs, Qualcomm's chairman and chief executive, attributed much of the company's rapid growth to sales in China, India and South America, though he said sales in the U.S. were also "very strong." Another positive development, he said, was a decision by Verizon Wireless to begin a broad deployment in the U.S. of a high-speed data service that is being used in South Korea and Japan.
"It is a major step ahead," Mr. Jacobs said of the new service. "We think that is going to produce very good business."
For the calendar year, Qualcomm expects about 53 million CDMA phones to be shipped in North America, and about 14 million in China and 13 million in India, Mr. Jacobs said.
Qualcomm said it expects total revenues to decrease 9% to 15% in the second quarter from the first, reflecting seasonal patterns. It set a range for earnings excluding the QSI segment of 38 cents to 41 cents a share, compared to the First Call consensus of 38 cents.
For the fiscal year ending in September, Qualcomm said it now expects earnings excluding the QSI segment of $1.56 to $1.61 a share. The company had earlier projected earnings for the year of $1.37 to $1.43 a share. Analysts' consensus on that basis currently stands at $1.57, according to Thomson First Call. The company said total revenue, including QSI, would rise by 6% to 10% from the prior year.
Peter Friedland, an analyst at W.R. Hambrecht, said many analysts had raised their annual forecasts in December, when Qualcomm boosted its guidance for the first period. He said other cell-phone makers, including Nokia Corp. and Motorola Inc., were benefiting from rising demand, based on their remarks about the period ending in December.
Qualcomm shares traded at 4 p.m. at $58.77 Wednesday, off 11 cents, on Nasdaq. The stock declined slightly in after-hours trading following the announcement to $58.65, according to INET ATS Inc.
Write to Don Clark at don.clark@wsj.com |
