Qualcomm Misses Q4 Views, But Q1 Profit Guidance In Line

• Brian Deagon
• On 6:41 pm EST, Wednesday November 4, 2009

Wireless giant Qualcomm late Wednesday reported quarterly results that missed analyst views, but its profit outlook for the current quarter met views and it projected growth in 2010.

The maker of chips and technology for cell phones said per-share profit for its fiscal first quarter ended Sept. 27 fell 24% to 48 cents ex items. Analysts polled by Thomson Reuters had expected 52 cents. The company said sales fell 19% to $2.69 billion, where analysts had expected $2.72 billion.

But it sees better days ahead, projecting per-share profit in the current quarter of 54 cents to 58 cents ex items. That would be up 74% to 87% from the year-earlier quarter and is in line with the 56 cents expected by analysts.

The company projects sales this quarter of $2.55 billion to $2.75 billion, up 2% to 10%. Analysts were expecting $2.84 billion, but in either case it would mark the first year-over-year sales growth in four quarters and first profit growth in five quarters.

Qualcomm (NasdaqGS:QCOM - News) shares were up about 1% after hours, after it reported the results. But shares have fallen 13% since late July.

In a statement, Chief Executive Paul Jacobs said he was pleased with the company's performance "in a challenging and uncertain global economic environment."

The company licenses technology for CDMA, one of the main technology standards for wireless communications. Jacobs said Qualcomm "anticipates accelerated CDMA device growth in calendar year 2010 ... ."

Still, the company's outlook for this fiscal year lagged views. The company said it expects fiscal 2010 earnings of $2.10 to $2.30 per share on revenue of $10.5 billion to $11.3 billion. Analysts were expecting $2.32 and $11.6 billion.

In his statement, Jacobs noted that the company's fiscal 2009 revenue of $10.4 billion, down 7%, was "in line with our guidance at the outset of the year." It also met analyst views.

The latest quarterly results include a $230 million charge, or 14 cents per share, for an estimated fine expected to be levied by the Korea Fair Trade Commission. But the year-earlier results include $560 million, or 20 cents per share, from the execution of license and settlement agreements with No. 1 cell phone maker Nokia (NYSE:NOK - News), after the two had spent years in litigation.

In the current quarter, Qualcomm said it expects mobile chip shipments of 89 million to 92 million units, in line with estimates and up from 63 million in the year-earlier quarter. It expects 130 million to 135 million CDMA and WCDMA handsets to ship, up from 125 million a year ago.

Jacobs said Qualcomm's operating performance in the quarter was driven by continued growth in third generation, or 3G, broadband wireless chipsets.

"We continue to forecast growth for 3G CDMA in 2009 despite industry forecasts of a decline in the total handset market," he said in the statement.

Global cell phone shipments last quarter fell 6% from the year-earlier period, to 287 million units, but rose 5.6% from the second quarter, according to research firm IDC. The sequential growth indicates the industry is edging toward recovery, IDC says.

Last quarter, Microsoft (NasdaqGS:MSFT - News) launched its newest Windows Mobile operating system. Many Windows Mobile phones run on Qualcomm chips.

About a dozen handsets running the Android operating system that's backed by Google (NasdaqGS:GOOG - News) have been introduced, of which "a majority" also run on Qualcomm chips, according to Qualcomm executive Alex Katouzian.

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