Qualcomm's 1st-Quarter Earnings As Expected; Sales Warning Hits Stock
Dow Jones Online News, Tuesday, January 25, 2000 at 21:55
NEW YORK -(Dow Jones)- Qualcomm Inc. late Tuesday reported fiscal first-quarter earnings that soared nearly four-fold on strong sales and were in line with analysts' estimates.
However, a warning by Chief Executive Officer Irwin Jacobs that the company will enter a slump in chip sales during the next quarter sent shares tumbling in after-hours trading.
Qualcomm (QCOM), a leading maker of chip sets for wireless phones and a patent-holder on crucial industry technology, said it expects chip sales to be down for the second quarter from the first quarter due to seasonal factors and a shortage of handset components.
The transition by customers from Qualcomm's old chips to new chips is also partially to blame.
None of the second quarter projections are "cataclysmic," said Ed Snyder, analyst with Hambrecht & Quist. "But to support this kind of (stock) value, you're going to have to be up and to the right every quarter."
The San Diego communications-technology company said net income for the period ended Dec. 26 came to $177.1 million, or 23 cents a share on a fully diluted basis, compared with $48.5 million, or eight cents a diluted share, in the year-earlier period. Revenue rose 19% to $1.12 billion.
The latest results included charges of $24 million related to the sale of its consumer-products business to Kyocera Corp. Excluding the charges, the company said it would have posted earnings of about $192 million, or 25 cents a share. The mean estimate of analysts surveyed by First Call/Thomson Financial was for earnings of 24 cents per share.
Qualcomm said it expects to record additional charges in the second quarter as a result of the sale, although those charges should be offset by investment gains.
During the latest quarter, Qualcomm said it shipped 14.5 million mobile station modem phone chips to customers world-wide, compared with five million units in the year-ago period.
The company expects second-quarter phone-chip shipments to be lower than the first quarter because of seasonal factors, inventory balancing by customers and transition to newer chips. It said second-quarter phone shipments also may fall below first-quarter levels because of seasonal factors.
However Qualcomm expects second-quarter results to meet or exceed first-quarter core earnings. The company also said it remains comfortable with the current analyst mean estimate for fiscal 2000.
The company said it believes the market for code division multiple access, or CDMA, products and demand for its CDMA chipset and software applications will continue to grow in the future despite the quarterly fluctuations.
The mean estimate of analysts surveyed by First Call/Thomson Financial is for earnings, excluding charges, of about 25 cents a share in the second quarter and $1.02 a share for fiscal 2000.
Qualcomm had 1999 second-quarter earnings before items of $65 million, or 82 cents a diluted share, on revenue of $932.4 million. The company had 1999 full-year earnings before items of $420 million, or $2.46 a share, on revenue of $3.94 billion.
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