Subject:  Qualcomm Boosts Forecast Amid Chip Demand |
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Date Posted: 20:46:33 12/04/03 Thu
Qualcomm Boosts Forecast Amid Chip Demand
Thursday, December 04, 2003
CHICAGO — Qualcomm Inc. (QCOM) on Thursday raised quarterly earnings and revenue forecasts, citing higher-than-expected sales of its mobile phone chips due to strong demand for cell phones with color screens and digital cameras.
Shares of the San Diego, Calif.-based company, which sells mobile phone chips and licenses wireless technology, rose nearly 10 percent.
"Increased sales of mid- and high-tier phones featuring high-resolution color screens, megapixel (digital) cameras and position location resulted in a slight increase of the average selling price, offsetting increased sales of low-priced, entry-level phones," Qualcomm Chairman and Chief Executive Irwin Jacobs said in a statement.
He also cited the expansion of advanced networks that allow wireless Web surfing and the positive impact of new rules that allow users to change services without switching their telephone numbers.
Jacobs also said based on the orders to date and current customer projections, the company believes that strength in the current quarter, its fiscal first quarter, will extend into the subsequent quarter.
Analysts were surprised by the raised outlook.
"That's a big jump," said Shawn Campbell, principal with Chicago-based Campbell Asset Management. He does not own shares in the company but follows it closely.
"They have a number of things working in their favor," he added, pointing to demand for cell phones with cameras and gaming, an improving U.S. economy as well as strong demand in China and India.
Campbell said the number portability (search) issue will play a bigger role in the early part of next year as consumers buy new phones after they switch to new providers.
Qualcomm said on Thursday it expects to post a first-quarter net profit, including losses from its investment unit, of 36 cents to 37 cents a share, up from its target of 25 cents to 28 cents a month ago.
Excluding the investment losses, it expects a profit of 47 cents to 48 cents a share. The average Wall Street estimate was 38 cents a share, according to Reuters Research, a unit of Reuters Group Plc.
The company expects total revenue in the quarter ending Dec. 28 to rise between 11 percent and 13 percent, compared with its earlier forecast of a decline of 1 percent to 5 percent.
Excluding the investment unit, it now expects sales to rise 11 percent to 12 percent. Wall Street analysts were expecting revenue to range between a decline of 10.5 percent and an increase of 6 percent.
Royalty reports from licensees, received in the first quarter for its CDMA products sold in the fourth quarter, indicate the average selling price of new units rose slightly compared with third-quarter reports, the company said.
CDMA, or Code Division Multiple Access (search), is a wireless transmission standard that competes globally with GSM, or Global System for Mobile Communications, technology. Qualcomm owns most of the patents to CDMA technology.
Independent telecom analyst Jeff Kagan said the news was a sign of the economic recovery in general and in the telecoms sector, which could give a boost to the share prices of other communications chip makers such as Motorola Inc. (MOT) and handset makers such as Nokia (NOK) and Ericsson (ERICY). However, Motorola on Thursday said that parts shortages were delaying the deliveries of hot-selling camera phones.
Qualcomm's stock was up 9.6 percent at $48.73 on the Nasdaq, after hitting a 12-month high of $48.86.
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