Qualcomm denies concern over inventory buildup
Wednesday September 25, 3:03 pm ET
SAN FRANCISCO, Sept 25 (Reuters) - Wireless technology company Qualcomm Inc. (NasdaqNM:QCOM - News) on Wednesday denied concerns that cell phone makers were ordering more chips than they need ahead of the holiday season, which could hurt future sales.
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San Diego-based Qualcomm owns most of the key 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 last week raised its guidance for cell phone chip shipment in its current quarter ending in September on strong demand and said it expects to ship even more chips in the next quarter.
However, some analysts had expressed concern that the strength was driven by inventory buildups by customers. They worried that if Qualcomm's customers order more chips than they currently need, the company might see a slowdown in orders until those chips have been used.
"Right now, we just do not see an inventory build," said Donald Schrock, president of Qualcomm's CDMA Technologies Group, the unit that sells CDMA chips and licenses.
"What we're seeing now is an expedite mode, which tells us they don't have much inventory ... (Customers are) pushing us pretty hard for product," he said at a Banc of America Securities conference in San Francisco.
Qualcomm shares were up 97 cents or 3.5 percent at $28.51 on Wednesday afternoon on the Nasdaq.
Schrock attributed Qualcomm's positive outlook to strong markets around the world and share gains as a result of increased business from the world's No. 2 mobile phone maker Motorola Inc. (NYSE:MOT - News)
He cited advanced CDMA service launches by Verizon Wireless (London:VOD.L - News; NYSE:VZ - News) and Sprint PCS Group (NYSE:PCS - News) in the United States, solid demand in Korea and subscriber gains by Japan's CDMA operator KDDI Corp. (Tokyo:9433.T - News).
"We're also seeing China take up starting ... we're also seeing orders now start to come in from India," Schrock said, adding that Qualcomm still expected industrywide CDMA handset sales of 80 million to 85 million units in calendar 2002.
Still, Schrock said Qualcomm might see chip shipment decline in the quarter ending in March due to seasonal weakness.
"I wouldn't be surprised to see it go down a little bit," he said. |
