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Qualcomm Profit Falls, Yet Tops Estimate; Lifts FY Outlook

Qualcomm Profit Falls, Yet Tops Estimate; Lifts FY Outlook
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Chip maker Qualcomm Inc. (QCOM: Quote), said Wednesday its second-quarter profit slid 16 percent from last year, when results benefited from hefty gains related to the sale of a spectrum.

However, excluding items, Qualcomm's adjusted earnings improved from last year and topped Wall Street estimates, as did revenues which jumped 24 percent on strong demand for its chips used in smartphones and other devices.

Qualcomm shares slipped six percent in after-hours trade on the Nasdaq, after detailing a soft earnings outlook for the third quarter, although indicated robust revenue expectations. The company meanwhile raised its outlook for fiscal year 2013.

Qualcomm provides baseband chips, which connect phones to cellular networks, to leading wireless device makers such as Samsung, and also licenses its code division multiple access technology. The company's results are eagerly watched as an indicator of how the handsets market performs.

While the semiconductor sector suffered from a slump in 2012 amid economic uncertainties, companies like Qualcomm have shown good results as demand for smartphones, tablets and other electronic items gained momentum.

San Diego, California-based Qualcomm posted quarterly revenues of $6.12 billion, compared to $4.94 billion in the prior year. On average, 35 analysts polled by Thomson Reuters estimated revenues of $6.07 billion for the quarter.

Qualcomm shipped 173 million units of CDMA-based Mobile Station Modems during the quarter, up 14 percent from last year.

The company reported quarterly net earnings of $1.87 billion or $1.06 per share, compared to $2.2 billion or $1.28 per share in the prior year.

Results for the prior year included $761 million for discontinued operations as a result of a $1.2 billion gain associated with the sale of its 700 MHz spectrum.

Excluding items, adjusted earnings for the quarter were $2.01 billion or $1.17 per share, compared to $1.8 billion or $1.01 per share a year ago. Thirty-four analysts had a consensus earnings estimate of $1.16 per share for the quarter. Analysts' estimates typically exclude special items.

For the third quarter, Qualcomm expects net earnings in the range of $0.80 to $0.88 per share, adjusted earnings of $0.97 to $1.05 per share, and revenues of $5.8 billion to $6.3 billion. Analysts currently expect earnings of $1.04 per share on revenues of $5.88 billion for the quarter.

The company anticipates MSM chip shipments of 163 million to 173 million units for the quarter.

For fiscal year 2013, Qualcomm now expects net earnings of $3.78 to $3.93 per share, adjusted earnings of $4.40 to $4.45 per share, and revenues of $24 billion to $25 billion. Analysts currently expect earnings of $4.53 per share on revenues of $24.09 billion for 2013.

The company had earlier estimated net earnings of $3.61 to $3.81 per share, adjusted earnings of $4.25 to $4.45 per share, and revenues of $23.4 billion to $24.4 billion.

Qualcomm stock closed Wednesday at $66.00, up $0.65 or 0.99%, on a volume of 13.05 million shares. In after-hours trade, the stock lost $3.96 or 6.00%. In the past year, the stock trended in a range of $53.09 - $68.50, with a three-month average volume of 11.41 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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