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To: Dealer who wrote (26035)	7/19/2000 11:01:28 PM
From: Dealer	Read Replies (1) \| Respond to of 35685

QCOM--Wednesday July 19 9:37 PM ET Qualcomm Stock Drops on Sales Worries By Timna Tanners LOS ANGELES (Reuters) - Mobile phone technology company Qualcomm Inc. (NasdaqNM:QCOM - news) on Wednesday said its third-quarter earnings per share rose 23 percent, matching Wall Street estimates, after record shipments of its phone chips. The stock, however, fell in after-hours trading amid worries about a weak sales outlook for South Korea and China and disappointing revenues. The San Diego-based company reported earnings of $218 million, or 27 cents a share on a pro forma basis, from $156 million, or 22 cents a share, a year earlier. Wall Street analysts had expected the company to post earnings of 27 cents a share, according to First Call/Thomson Financial, which compiles analysts' earnings estimates. Revenues rose to $714 million from $645 million on a pro forma basis a year earlier. Shares of Qualcomm lost 2-1/8 on the Nasdaq to close at 63, before the earnings release. Its stock dropped to 60-3/4 in after-hours activity on Instinet. ``They just hit the earnings estimate, and of course the numbers are going to be going down for next quarter,'' CIBC World Markets analyst Dale Pfau said. Qualcomm quantified its earlier warning of weaker chipset sales in South Korea, estimating unit sales would decline by 2 million to 3 million sequentially in the next quarter. Sales to Korea will likely account for 20 to 25 percent of total CDMA sales this year, Qualcomm said. ``Each of our business units have performed well this quarter, although chip sales have been and continue to be impacted by Korea's ... reduced share,'' Chief Executive and Chairman Irwin Jacobs said told analysts on a conference call. ``There was a significant discrepancy (in the earnings report) compared to revenues expectations,'' Volpe Brown Whelan analyst Pete Peterson said, noting the lower sales numbers were a result of declines to South Korea. ``We're ready for big things, but we just weren't close enough to have Korea not pull through,'' he added. Peterson said he anticipates a recovery in sales to Korea by the end of the year, in the worst-case scenario. Qualcomm's shares have tumbled since peaking at 200 in January, on concerns over worldwide adoption of its CDMA technology, especially in key Asian markets. Shares remain higher than a year ago, when Qualcomm traded at about 34. CDMA (code division multiple access) is a new mobile communications technology that competes with European standard GSM. Qualcomm collects royalties for cdma2000 and W-CDMA, two different flavors of third generation CDMA. Qualcomm's pro forma earnings for the quarter excluded $64 million in amortization of acquisition-related goodwill and other assets and $7 million in taxes on employee non-qualified stock option exercises. Including one-time items, Qualcomm reported net income of $154.7 million, or 19 cents a share, versus $58.9 million, or 9 cents a share in the same quarter in 1999.