QCOM--=DJ Qualcomm CEO Sees Improving 3Q Chip Sales, Handset Demand
04/19/2000
Dow Jones News Services
(Copyright ¸ 2000 Dow Jones & Company, Inc.)
(This report was originally published late Tuesday.)
By Johnathan Burns
NEW YORK (Dow Jones)--Wireless technology developer Qualcomm Inc. (QCOM) posted higher-than-expected second quarter earnings Tuesday and made bullish predictions for the remainder of the year.
After the market close, Qualcomm, San Diego, reported pro forma earnings per share of 26 cents on revenue of $727.7 million, beating consensus estimates by two cents a share.
But forward-looking statements by Chief Executive Irwin Jacobs may be what moves the stock tomorrow, as the company expects to ship more than 14.5 million mobile phone chips worldwide in the coming quarter, compared with 11 million in the just-ended second quarter.
"I think we will beat it by an interesting amount," Jacobs told Dow Jones Newswires. "We haven't specified the number of chips we could be selling. We are seeing quite a few orders."
Qualcomm exited the company's fiscal second quarter with a book-to-bill ratio of greater than one. Since that time, the company has added even more orders, although Jacobs wouldn't reveal the final ratio.
Book-to-bill ratios of more than one indicate swelling demand.
Jacobs said Qualcomm is comfortable with Wall Street's earnings expectations for its third quarter, which are 27 cents a share, according to First Call.
Jacobs said he is also comfortable with year-end earnings estimates of $1.05 a share.
Second-quarter revenue was down from the first quarter due to seasonal conditions and a backlog of inventory among handset providers. In the prior year's second quarter, Qualcomm's revenue was $932.4 million. The year-on-year decline reflects revenue lost when the company sold two business units, including its handset-making business.
The company, which never showed good results in its handset unit, had entered the business in hopes of stimulating demand for its CDMA technology.
It worked.
Jacobs said he expects annual industry-wide CDMA handset sales in the mid 60 million to low 70 million range by year-end.
"We're seeing a 40% increase going into the next year," he said. "These are numbers based on inputs from others."
"Our earnings depend quite a bit on the number of phones sold during the quarter," Jacobs said.
He expects the introduction of new chipsets to further stimulate demand, as wireless service providers seek to increase revenue by offering customers data and Internet access via mobile handsets.
Meanwhile, Jacobs said the company is moving forward in its attempts to penetrate the Chinese market.
Qualcomm has inked a deal to supply the country's No. 2 wireless service provider China Unicom with CDMA-based technology. Some have speculated the Chinese government wants use the agreement as a tool to help it enter the World Trade Organization.
"We are preparing for an increase in CDMA sales in China," Jacobs said. "We are increasing our activities there."
Shares of Qualcomm, which ended the day down 4% to 112 3/16 on the Nasdaq, traded as high as 120 in the after-hours market, according to Instinet.
-Johnathan Burns; Dow Jones Newswires; 201-938-2020; johnathan.burns@dowjones.com
(END) DOW JONES NEWS 04-19-00
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