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Strong profits but weaker outlook from Qualcomm

by Scott Bicheno on 28 January 2010, 11:03

Tags: Qualcomm (NASDAQ:QCOM)

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Great expectations

Mobile phone chip giant Qualcomm looks very nicely positioned as the mobile Internet market goes exponential. Not only does it own much of the IP inside 3G wireless technology, but its Snapdragon SoCs are being snapped-up (sorry) all over the place.

So it came as a bit of a surprise to see Qualcomm offer a cautious outlook for this quarter, predicting revenues lower than most analysts were expecting. As a consequence, Qualcomm's shares were down a sobering 9.32 percent in pre-market trading.

The last quarter of 2009 was pretty decent, however. Qualcomm managed revenues of $2.67 billion - up six percent year-on-year. But the impressive figure was a net income of $841 million, which was an improvement of 147 percent on a year ago.

"We are pleased with our performance this quarter, driven by healthy demand for our chipsets, strong shipments of 3G devices by our licensees and lower operating expenses.  We're executing on our strategic objectives and reaffirming our 2010 3G device forecast, an increase of 21 percent year-over-year," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm.  

"A subdued economic recovery in developed regions, including Europe and Japan, combined with relative strength at the lower end of the market, is changing our estimated 3G device average selling price and chipset mix for this fiscal year.  Accordingly, we are modestly reducing our fiscal year revenue estimates to reflect this near-term market situation, but are maintaining our earnings per share guidance."  


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