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To: Clint E. who wrote (35018)	11/7/2001 1:34:11 AM
From: Clint E.	Read Replies (1) \| Respond to of 70664

Tues Nov 6 10:20 PM -- Qualcomm 4th Quarter Misses Expectations Analyst: QCOM's Q4 'not a train wreck,' outlook positive for FY02 - (ON24) By Ben Berkowitz and Yukari Iwatani LOS ANGELES/CHICAGO (Reuters) - Wireless technology company Qualcomm Inc. (Nasdaq:QCOM - news) on Tuesday reported fourth-quarter earnings below Wall Street expectations and cautioned earnings for the current fiscal year would be at the low end of already reduced estimates. The company cited the global economic slowdown, an accounting change that meant less up-front revenue for its license agreements with wireless carriers, and a stagnant market in Latin America as reasons for its low forecast for fiscal 2002. Qualcomm also cautioned that most of the growth in the current year would come in the second-half as its next-generation wireless technology achieves widespread deployment in the leading markets of United States, Japan and Korea. The San Diego-based company posted earnings excluding one-time items and before new SEC-mandated accounting rules, of $186.1 million, or 23 cents a share compared with comparable earnings of 25 cents a share in the same period last year. That was below the most bearish Wall Street estimate and two cents off the consensus, which had been for 25 cents. Revenues were $682 million compared with $640 million in the prior quarter and $635.4 million a year earlier. Qualcomm shares fell 8 percent, or $4.53, to $50.20 in after-hours Instinet trade, after closing at $54.73 on Nasdaq. The company blamed its shortfall in the past quarter on lower interest rates on carrier financing in its wireless services segment. The shortfall rounded out a disappointing year for the once high-flying company as roll-outs of its wireless phone technology slowed and its stock lost 33 percent. ``It was a messy quarter,'' said Peter Friedland, an analyst at W.R. Hambrecht and Co. ``They did miss the EPS number so I think the stock could react negatively initially, but in terms of the underlying fundamentals for the business, (the next-generation rollout) seems to be going as planned.''. Qualcomm owns all of the relevant patents to CDMA (news - web sites) (code division multiple access) technology, which is the dominant standard in the United States and competes against a widely-used alternative standard called GSM, or Global System for Mobile Communications. Qualcomm forecast that the number of global subscribers to CDMA cellular networks would grow by as much as 40 percent in 2002 to up to 155 million. FISCAL 2002 OUTLOOK For the current quarter, Qualcomm forecast pro forma earnings in the range of 21 cents to 24 cents a share and a 5 percent to 10 percent gain in revenues. The earnings guidance was lower than Wall Street estimates which had ranged from 25 cents to 30 cents a share with an average of 27 cents. For fiscal 2002, Qualcomm projected earnings per share at $1.10 to $1.20, with revenue growth rebounding to 15 percent to 25 percent. That was at the low end of estimates which had been under pressure from downward revisions since early October. Most of the growth in fiscal 2002 is expected to come in the second half of the year, Qualcomm Chief Financial Officer Anthony Thornley said on a conference call with analysts. The company said its estimate was based on the sale of 85 million to 95 million phones using its CDMA technology during calendar 2002, along with a 10 percent annual decline in the price of the phones. Of the 85 million to 95 million CDMA phones Qualcomm expects to be sold in 2002, it expects 12 million to 13 million units to be sold in Korea, 15 million units to be sold in Latin America and 30 million units to be sold in the United States. ``Generally speaking there hasn't been a real change in the outlook for the company in terms of the rollout of CDMA,'' Hambrecht's Friedland said. In the current quarter, the company said it expected to ship 15 million to 16 million of its standard Mobile Station Modem (MSM) chips, up from 13 million in the fourth quarter. Qualcomm also said it was in talks with an unidentified third-party to sell its stake in Mexican wireless operator Pegaso, a deal which it said could close in the current quarter. Thornley said that prices on cell phones running its next-generation CDMA 2000 1x chipsets would have to fall below $100 in order to spur growth in that market. Such phones would begin to be available by the end of this year in Latin America and India, where low-cost equipment is key to the growth of wireless networks, he told Reuters. Korea was the first country in the world to deploy Qualcomm's next-generation technology called CDMA 2000, which offers higher voice capacity and high-speed Internet access. The company said sales of CDMA 2000 phones grew substantially in Korea, ending the most recent quarter with more than 1.9 million subscribers. Meanwhile, Japan's KDDI Corp. (9433.T) is expected to launch its CDMA 2000 network next spring. In China, where CDMA has been chosen as the national standard, Qualcomm said it expects the initial build out of CDMA wireless networks to be largely completed in early 2002. Qualcomm shares have rebounded by more than 40 percent after hitting a 26-month low of $38.31 on Oct. 5. The shares have still lost some 33 percent this year, in line with losses for other companies in the wireless communications sector.