<Peterson, who plans to reiterate his "strong buy" rating on
Qualcomm shares in a published report tomorrow, said he is
encouraged by how quickly Qualcomm solved some of its inventory
issues and with shipments of early next-generation chip samples.
"They have a tangible product now that we can associate with the future," he said. "We think
the market environment is very positive for these guys."
Qualcomm beats analyst expectations
By Corey Grice
Staff Writer, CNET News.com
April 18, 2000, 5:25 p.m. PT
Wireless technology provider Qualcomm posted a second-quarter profit that exceeded
expectations, despite slower sales of its microchips that power many mobile phones.
Qualcomm reported net income of $199.7 million, or 25 cents per share, compared with a net
loss of $42.6 million, or 7 cents a share, for the same period last year.
Excluding non-recurring items including acquisition-related costs
and investment gains, and adjusted for the sale of certain business
units, Qualcomm reported pro forma net income of $207 million, or
26 cents per share. That compares with profits of $119 million, or
18 cents per share, for the same period last year.
Wall Street expected a profit of 24 cents per share, according to a
survey of analysts polled by First Call.
"They pre-announced that they could see some sequential
degradation in chip sales, so we saw that. It wasn't a stellar
quarter, but this was in line with our expectations," Pete Peterson,
a wireless equity analyst at Prudential Volpe Technology Group,
said. "In the big picture this quarter was a hiccup that was
noticeable and measurable but without long-term impact on the
company."
Peterson, who plans to reiterate his "strong buy" rating on
Qualcomm shares in a published report tomorrow, said he is
encouraged by how quickly Qualcomm solved some of its inventory
issues and with shipments of early next-generation chip samples.
"They have a tangible product now that we can associate with the future," he said. "We think
the market environment is very positive for these guys."
Quarterly revenue fell to $727.7 million from $932.4 million a year ago. Revenue on a pro forma
basis, excluding the results of exited businesses, increased to $649 million, up 16 percent
from revenue of $558 million a year ago.
Qualcomm completed the sale of its mobile phone handset manufacturing business to Kyocera
during the quarter ended March 26.
Analysts were watching Qualcomm's numbers closely--the company's first earnings report
since selling its handset business to Kyocera--for growth in royalties. The decision to sell the
handset unit, coupled with the earlier sale of wireless network infrastructure gear to Ericsson,
leaves Qualcomm dependent upon technology royalties and chipset sales.
Qualcomm, which pioneered the code division multiple access (CDMA) wireless technology
popular in the United States and Korea, said quarterly license and royalty fees totaled $168
million. That compares with $106 million for the same period a year ago.
The company also has faced weak demand for CDMA chipsets earlier in the year, particularly
in the Korean market, which resulted in slower chip sales and quarterly declines in royalty
fees. Qualcomm warned last quarter that sales would slip.
Qualcomm executives said the company shipped 11.2 million phone chips worldwide during the
quarter, up from 9 million shipped a year ago, but down substantially from the 14.5 million units
shipped during the first quarter. A backlog of inventory and seasonal sales issues affected the
company, executives said.
"These inventory and seasonal issues have returned to normal," Qualcomm chief operating
officer Richard Sulpizio said in a conference call. "More importantly we expect that third-quarter
shipments will be higher than first-quarter sales."
Executives said they expect to meet consensus estimates for a third-quarter profit of 27 cents
per share based on projected growth for phone chips and system software.
Stock in Qualcomm closed 4 percent lower today at $112.19, ahead of the earnings news.
Qualcomm shares saw a phenomenal run-up last year based in part on the potential for
high-speed wireless Internet access powered by the company's technology.
"We're strong believers that wireless data and Internet access will spur tremendous growth over
the next few years," Qualcomm chief executive Irwin Jacobs said in a conference call today.
Meanwhile, clouds remain over the future of its deal with China Unicom to expand into that
massive market. |
