Friday June 21, 10:32 am Eastern Time
Reuters Business Report
Qualcomm Shares Gain on Upbeat Outlook
By Yukari Iwatani
CHICAGO (Reuters) - Qualcomm Inc. (NasdaqNM:QCOM - News) on Friday said it expects earnings in the current quarter to meet or exceed the high end of its previous forecast, boosted by strong demand for its advanced wireless technology that lets users surf the Web, swap pictures and download music.
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Previously, San Diego, California-based Qualcomm said it expected earnings for the fiscal third quarter, ending June 30, of 21 cents to 23 cents a share, excluding its strategic investment unit.
Wall Street analysts, on average, had been expecting 22 cents per share, according to Thomson First Call. The company posted earnings of 23 cents in the year-ago third quarter.
Shares of Qualcomm rose $1.21, or more than 4 percent, to $27.54 in early Nasdaq trading.
Analysts said their positive expectations for the third quarter were confirmed by the company's statements.
"I don't think anybody had any doubts about the current quarter," said John Bucher, an analyst with Gerard Klauer Mattison & Co. "At their analyst meeting in May, Qualcomm made it pretty clear that they were in pretty good shape."
Qualcomm owns most of the patents to Code Division Multiple Access (CDMA), the dominant wireless technology standard used in the United States and the second most commonly used technology in the world. It licenses its technology and sells CDMA chips for phones and other wireless devices.
The company attributed its strong outlook to increasing demand for CDMA products across all major regions. It said it was particularly helped by the rapid worldwide growth of CDMA2000 1X, BREW and gpsOne position-location technology.
CDMA2000 1X is Qualcomm's advanced technology that gives users access to high-speed wireless Internet connections via cell phones and other mobile devices. BREW, or Binary Runtime Environment for Wireless, is Qualcomm's technology for downloading applications.
Qualcomm, like other telecommunications firms, had been suffering from the sluggish economy and lower industry spending. Its stock has fallen 49 percent so far this year as investors worry about weak subscriber growth at U.S. wireless operator Sprint PCS Group (NYSE:PCS - News), the slow roll-out of CDMA in China, and the desire of Nokia (NOK1V.HE), the No. 1 mobile phone maker, to compete with Qualcomm.
The Standard & Poor's telecom equipment index has fallen 45.5 percent so far this year.
Brian Modoff, an analyst with Deutsch Banc Securities, said he was never concerned about Qualcomm's current quarter but was still worried about slowing subscriber growth in the United States and China as well as weakness in Latin America.
Qualcomm was hurt earlier this year by a drop in demand in South Korea after the government there cracked down on mobile phone subsidies.
The company said it expects to meet or exceed the high end of its previous forecast for 15 million to 16 million phone chip shipments in the third quarter.
It also said it was seeing strong orders for its fourth quarter, ending Sept. 29. |
