Qualcomm Beats Forecast, but Strains to Get Chips By BLOOMBERG NEWS Published: April 18, 2012
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Qualcomm, the largest maker of mobile phone semiconductors, reported earnings that exceeded Wall Street’s expectations on Wednesday, but it also forecast disappointing sales and profit for the current quarter as it increases spending to improve output of new chips for smartphones.
The San Diego-based company estimated that sales for its third fiscal quarter, ending in June, would be $4.45 billion to $4.85 billion.
Analysts on average had estimated $4.81 billion, according to data compiled by Bloomberg. Qualcomm forecast net income of 67 cents to 73 cents a share, compared with the average prediction of 77 cents.
Qualcomm’s operating expenses surged 41 percent to $3.43 billion in its second fiscal quarter, outpacing sales gains, as the company spent more on production to meet demand for new types of advanced chips.
Qualcomm cannot get enough supply from its existing manufacturer and is seeking additional output, said its chief executive, Paul E. Jacobs.
Daniel Berenbaum, an analyst at MKM Partners, said, “Qualcomm needs to think strategically about its foundry partners and about its foundry supply.”
For its second quarter, which ended on March 25, Qualcomm reported net income of $2.23 billion, or $1.28 a share, compared with $999 million, or 59 cents, a year earlier. Sales rose 28 percent to $4.94 billion. Analysts on average had predicted earnings of $1.10 a share and sales of $4.84 billion.
Mobile phone shipments are estimated to reach 1.7 billion in 2012, a gain of 8.2 percent from 2011, according to IDC. Smartphone shipments, a subset of the mobile phone market, will surge 33.5 percent, the market researcher predicts.
Qualcomm, like other chip makers, relies on so-called foundries in Taiwan to build its chips.
The company is spending to get its latest chips made by new suppliers, Mr. Jacobs said. The shortfall reflects heavy demand and was not caused by manufacturing problems, he said, adding that the discrepancy should be made up by the end of the year.
“It’s painful not to be able to supply all of the chips your customers ask for,” Mr. Jacobs said.
[Johnny: That should mean pricing power for TSM. UMC looks like it is no longer a relevant fab due to its execution errors the last few years.] |
