Qualcomm's Q1 Profits Jump 46%
Elliot Spagat, 01.22.04, 4:18 PM ET
Qualcomm reported a 46% increase in fiscal first-quarter profits on Wednesday, buoyed by holiday sales of mobile phones with color screens and cameras, and said second-quarter earnings may top Wall Street expectations.
The wireless equipment company posted net income of $352.3 million, or 43 cents a share, for the three months ended Dec. 28, compared to $241.3 million, or 30 cents a share, the same period a year earlier.
Excluding a loss of 8 cents a share from its investment unit, Qualcomm (nasdaq: QCOM - news - people ) earned 51 cents a share in the latest period, 3 cents above the average estimate of analysts polled by Thomson First Call.
Revenue rose 13.2% to $1.24 billion from $1.1 billion, boosted by royalty payments for its patented technology CDMA, or code division multiple access, which is used by Verizon Wireless and Sprint PCS Group (nyse: PCS - news - people ). Besides demand for the fancier phones, the San Diego-based company said customer inventories were ``near record low levels'' toward the end of last year.
Irwin Jacobs, Qualcomm chairman and chief executive, said the quarter ``exceeded our expectations by every measure.''
The company shipped 32 million chipsets during the quarter, up from 29 million a year earlier. But the sharp gains came in licensing fees on the sale of CDMA phones. Royalty payments jumped to $353.6 million from $239.7 million.
``Phone sales have just taken off at a very high rate,'' William Keitel, chief financial officer, said in an interview. ``It appears to have surprised everyone.''
In its second quarter, Qualcomm said it expected net income between 34 cents and 37 cents a share, up from 13 cents a year earlier. Excluding an anticipated loss of 4 cents a share from its investment arm, Qualcomm projected earnings between 38 cents and 41 cents a share, compared to analyst projections of 38 cents a share.
Qualcomm said it expected revenue in the second quarter will increase between 1% and 8% from $1.04 billion a year earlier.
For fiscal 2004, Qualcomm estimated net income between $1.41 and $1.46 a share, up from $1.01 last year and above its November forecast of between $1.17 and $1.23 a share. It projected revenue would grow between 6 percent and 10 percent from $3.97 billion last year, slightly higher than its November forecast of an increase between 3 percent and 7 percent.
Sanjay Jha, an executive vice president in charge of the company's CDMA technologies group, brushed aside growing competition in a conference call with analysts. Texas Instruments (nyse: TXN - news - people ) and STMicroelectronics N.V. (nyse: STM - news - people ) recently began sending samples of their CDMA chipsets to customers.
``Competition is nothing new for us,'' Jha said. ``We remain extremely bullish about our competitive position.''
Qualcomm shares fell 11 cents to close at $58.77 Wednesday on the Nasdaq Stock Market. They lost another 20 cents in after-hours trading.
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