Fri, Feb 01, 2013 - Page 15 News List

Qualcomm predicts profit to top analysts’ estimates

Bloomberg

Qualcomm Inc, the largest seller of semiconductors for mobile telephones, gave a second-quarter sales and profit forecast that exceeded analysts’ estimates, helped by strong sales of smartphones that run on its technology.

Profit in the current period will be US$0.98 to US$1.06 a share on revenue of US$5.8 billion to US$6.3 billion, San Diego-based Qualcomm said in a statement on Wednesday.

Analysts on average had projected net income of US$0.94 on sales of US$5.87 billion, according to data compiled by Bloomberg.

The rising use of Internet-ready handsets that run on fast fourth-generation networks lifts sales of Qualcomm’s chips. It also boosts revenue from licenses for mobile technology, which generates the bulk of profit. The forecast reflects growth in developing markets and brisk demand from first-time smartphone buyers, chief executive officer Paul Jacobs said.

“Emerging markets in general are going to be strong,” Jacobs said in a telephone interview.

Net income in the fiscal first quarter, which ended on Dec. 30 last year, rose 36 percent to US$1.91 billion, or US$1.09 a share, from US$1.4 billion, or US$0.81, a year earlier. Sales increased 29 percent to US$6.02 billion. Analysts on average had predicted earnings of US$0.97 on sales of US$5.9 billion.

Qualcomm’s forecasts are based on the growing popularity of smartphones and the company is not expecting world economic growth to accelerate, chief financial officer William Keitel said.

Any improvement will happen outside of developed economies, where government debt and high taxes will continue to hold back expansion, he said.

“I just don’t see any signs that that’s going to improve in any measurable degree,” he said.

Qualcomm bases its financial predictions on an assumption that the world economy will grow 3 percent, he said.

The majority of Qualcomm’s revenue comes from baseband chips, which connect phones to cellular networks, sold to wireless-device makers such as Apple Inc, HTC Corp and Samsung Electronics Co.

Most of the company’s profit comes from the licensing of so-called code division multiple access technology, a radio-communications standard used in other chips, handsets and telephone systems.

Qualcomm benefited as smartphone shipments surged an estimated 29 percent in last year December quarter, said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co.

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