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Qualcomm forecasts sales, profit that top analyst estimates

Qualcomm Inc., the largest seller of mobile-phone semiconductors, forecast fiscal first-quarter sales and profit that exceeded analysts’ estimates as it increases production of its most expensive chips.

Earnings in the current period will be 90 cents to 98 cents a share on revenue of $5.6 billion to $6.1 billion, Qualcomm (Nasdaq: QCOM) said Wednesday in a statement. Analysts on average had projected net income of 86 cents on sales of $5.33 billion, according to data compiled by Bloomberg.

Unlike chipmakers such as Intel Corp. (Nasdaq: INTC), whose sales are being hurt by slack personal-computer demand, Qualcomm is benefiting as consumers in developed nations snap up the newest phones and as those in emerging markets upgrade their devices, Chief Executive Officer Paul Jacobs said. The company also is pulling in more license revenue from its technology standards that provide high-speed data connections in smartphones.

“Qualcomm has absolutely been one of the prime beneficiaries in smartphones and tablets,” said Mike Burton, an analyst at Brean Capital LLC. “This is a very strong report.”

The company’s shares rose as much as 8.8 percent to $63.23 following the announcement. They had declined 3.7 percent to $58.12 at the close Wednesday, leaving them up 6.3 percent this year.

Qualcomm’s Jacobs said earnings are being bolstered by strong worldwide demand for smartphones, emerging-market consumers upgrading to more expensive handsets and increasing supply of his latest chips. The company sees those trends persisting next year, even though its projections are based on a “conservative” view of global economic growth, he said.

“There are a lot of trends that are coming together for us,” Jacobs said in a telephone interview. “Demand continues to go up.”

Earlier this year, Qualcomm said limited supply from contract manufacturer Taiwan Semiconductor Manufacturing Co. was requiring it to increase spending and enlist other vendors. Shortages had forced some customers to postpone the introduction of new smartphone models. Those phones are now going on sale, lifting Qualcomm’s chip sales and licensing revenue.

Fourth quarter

Net income in the fourth quarter, which ended Sept. 30, was $1.27 billion, or 73 cents a share, compared with $1.06 billion, or 62 cents, a year earlier. Sales rose 18 percent to $4.87 billion. Analysts on average had predicted sales of $4.65 billion.

Profit before certain items in fiscal 2013 will be $4.12 to $4.32 a share on revenue of $23 billion to $24 billion, Qualcomm said in the statement. Analysts on average had projected profit of $4.13 a share and sales of $21.7 billion, according to data compiled by Bloomberg.

The majority of Qualcomm’s revenue comes from baseband chips, which connect phones to cellular networks, sold to wireless device makers such as Samsung Electronics Co., Apple Inc. (Nasdaq: AAPL) and HTC Corp. The bulk 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 phone systems.

Some 711.4 million smartphones will be sold this year, a gain of 44 percent, Canaccord Genuity Inc. analysts projected in a report. The market will grow 35.4 percent next year, the analysts estimated.

Qualcomm’s licensing revenue is calculated as a percentage of the average selling price of phones. That’s been bolstered by increasing use of 3G connections in developing markets such as China, and growing demand for smartphones in Western Europe, the United States and parts of East Asia.

The company is also expanding into the market for application processors, the chips that run programs in phones and tablet computers, and will be supplying its Snapdragon product to computer makers using the new version of Microsoft Corp.’s (Nasdaq: MSFT) Windows operating system.

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Qualcomm Inc.

Company Website

5775 Morehouse Dr.
San Diego, CA 92121

Company Trade Data

Stock Symbol Close
Change
Chg %Chg
Volume
52-Week
High Low
QCOM
59.91
  0.65  
+ 1.10%
8,924,775,000
78.53
52.17

Insider Trade Data

Date Insider Shares Type Value
10/05/2015 Renduchintala, Venkata S 2,700 Sell $150,066
10/05/2015 Renduchintala, Venkata S 2,700 Sell $150,066
10/01/2015 Amon, Cristiano Renno 2,737 Sell $146,621
10/01/2015 Amon, Cristiano Renno 2,737 Sell $146,621
09/11/2015 Vinciquerra, Anthony J 1,000 Purchase $54,700

Qualcomm Inc. Executive(s):

Irwin Mark Jacobs

  • Founding Chairman, CEO Emeritus

Paul Jacobs

  • Executive Chairman

Tamar Elkeles

  • Vice President

Don Jones

  • Vice President

Don Rosenberg

  • General Counsel

Mark Leslie

  • Vice President, External Affairs

Steven Altman

  • Vice Chairman

Steve Mollenkopf

  • Chief Executive Officer

Derek Aberle

  • President

Navrina Singh

  • Director of Product Management

Related Videos

Top Attorneys 2015: Andrew Newton

Aug. 10, 2015 -- Reporter Katherine Connor speaks with Andrew Newton, a patent counsel at Qualcomm Inc. and a 2015 Top Attorney, about his work in the ever-changing world of patent law.

Watch all of our Top Attorneys 2015 videos.

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SIC - 3663 - RADIO AND TELEVISION BROADCASTING AND COMMUNICATIONS EQUIPMENT
SIC - 3663 - ELECTRONIC COMPONENTS, NOT ELSEWHERE CLASSIFIED

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2012