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Reuters
Qualcomm Posts Profit but Outlook Weak
Wednesday July 23, 5:42 pm ET
By Yukari Iwatani
http://biz.yahoo.com/rb/030723/tech_qualcomm_earns_2.html
CHICAGO (Reuters) - Qualcomm Inc. (NasdaqNM:QCOM - News) on Wednesday posted a net quarterly profit on higher revenues, but shares fell as the company gave weaker-than-expected guidance for its current quarter.
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The company, which sells mobile phone chips and licenses wireless technology, forecast fiscal fourth-quarter earnings at the low end of analysts' estimates on weaker-than-expected chip shipments.
Shares of Qualcomm fell about 2 percent to $35.50 in after-hours trading after closing at $36.25 on the Nasdaq.
"This is a company that has historically looked at the market with rose-tinted glasses," said Shawn Campbell, principal with Campbell Asset Management, which does not own Qualcomm shares. "The market always discounts a little bit what their guidance is, what their expectations are."
Qualcomm owns most of the patents to CDMA, or Code Division Multiple Access, the leading wireless technology in the U.S. and Asia. It has outperformed other telecoms equipment companies hurt by the sluggish economy and lower industry spending by licensing its technology and supplying more than 90 percent of the chips for CDMA phones.
However, analysts believe the company's string of exceptionally strong earnings results might be coming to an end as growth from China and India disappoint and it faces greater competition.
In May, chipmakers STMicroelectronics (Paris:STM.PA - News), Texas Instruments Inc. (NYSE:TXN - News) and mobile phone giant Nokia (NOK1V.HE) announced they would partner to offer advanced CDMA chips in a challenge to Qualcomm.
Qualcomm said it expected to ship 19 million to 21 million chips in the current quarter compared with analysts' expectations of about 21 million to 23 million.
"It's mildly disappointing. I wouldn't call it massively," Brian Modoff, wireless equipment analyst with Deutsche Bank Securities said. "We thought they could be a little cautious given that the top three vendors in CDMA -- LG, Samsung, and Motorola -- all missed their Q2 shipments, so you didn't get the inventory worked down."
Mobile phone makers have so far posted weak sales in the second quarter, hurt by the SARS virus outbreak and tough local competition in China.
Meanwhile, Texas Instruments, the No. 1 maker of mobile phone chips, this week posted quarterly sales lower than it had initially expected and said there was still an excess supply of handsets, an area of concern for analysts.
San Diego-based Qualcomm reported a net profit of $191.7 million, or 23 cents a diluted share for its fiscal third quarter, compared with a loss of $13.8 million, or 2 cents a share a year ago.
On a proforma basis, excluding investments and amortization of goodwill, the company posted a profit of 33 cents, beating analysts' expectations of 30 cents according to Reuters Research. Revenue in the quarter was $921.6 million, compared with $770.9 million a year ago.
Qualcomm said it expects earnings per share, excluding investments, of about 27 cents to 29 cents in the fiscal fourth-quarter as revenue increases about 2 percent to 6 percent. Analysts on average expected earnings of 29 cents on revenue of $871.4 million, according to Reuters Research.
For the full year, Qualcomm raised its earnings target, excluding investments, to a range of $1.40 to $1.42 on revenue growth of 31 percent to 33 percent. It previously forecast a range of $1.38 to $1.41 with revenue growing 30 percent to 33 percent.
Lucent Gets $1 Billion Wireless Equipment Deal With Sprint PCS
http://www.thestreet.com/_yahoo/markets/paulalace/10102508.html
By Paula Lacê
Markets Reporter
07/22/2003 04:39 PM EDT
Click here for more stories by Paula Lacê Telecom-equipment giant Lucent (LU:NYSE - news - commentary - research - analysis) signed a $1 billion deal Tuesday to bring Sprint PCS (PCS:NYSE - news - commentary - research - analysis) closer to the 3G world.
Lucent will provide equipment to upgrade Sprint's wireless network, the largest in the U.S., enabling it to offer so-called third-generation, or 3G, mobile services in the future. The agreement includes base stations, switching gear and software that can all be operated in 3G.
Third-generation technology would allow faster data transmission using mobile phones, including broadband connections. Wireless providers are currently trying to offer such connections worldwide, but there still aren't any 3G devices ready for mass consumption. Sprint presently operates a slightly less advanced code division multiple access, or CDMA, technology developed by Qualcomm (QCOM:Nasdaq - news - commentary - research - analysis).
"This is a confirmation of a close ongoing relationship between the two companies and could represent sharper growth given Sprint would continue to order equipment from Lucent for future advances in 3G," said Greg Teets, analyst at A.G. Edwards & Sons, which does not make a market or have investment banking relationship with either company.
But Teets said he would wait for Lucent's fiscal third-quarter results Wednesday before he changes any perspectives on the company, even though "wireless counts for half of Lucent's revenue and Sprint is a significant customer." Under the contract, deployment of the equipment would start this quarter.
Lucent is expected to post a loss of 7 cents a share, narrower than the 16 cents a share it lost in the year-ago period, and revenue of $1.97 billion. The company recently postponed its profitability target by as much as one year.
Observers think Lucent would also be interested in similar deals with another customer: Verizon Communications (VZ:NYSE - news - commentary - research - analysis), the largest U.S. wireless provider in terms of number of subscribers. Besides Verizon, "they are always seeking out new plans, and they are close to sealing some decent-sized contracts in China and India," said Teets.
Sprint said the contract is part of an ongoing $4.1 billion capital spending budget for 2003 which does not affect other suppliers, such as Nortel Networks (NT:NYSE - news - commentary - research - analysis) and Motorola (MOT:NYSE - news - commentary - research - analysis).
Shares of Lucent finished the day with a rise of 20 cents, or 11.6%, to $1.92, while Sprint shares gained 26 cents, or 1.8%, to $14.91.
Street Expects Qualcomm To Hit Earnings Estimates
http://biz.yahoo.com/djus/030722/1635001419_1.html
Tuesday July 22, 4:35 pm ET
By Tom Becker, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Driven by momentum in the U.S., China, and India, Qualcomm Inc. (NasdaqNM:QCOM - News) is expected to meet or slightly surpass Wall Street estimates when it reports fiscal third-quarter earnings results Wednesday after the bell.
The chipmaker is also expected to provide an optimistic outlook for its fiscal fourth-quarter.
"We believe the tone of the call will be optimistic and will highlight strength in key regions," said Christin Armacost, an analyst with SG Cowen. " However, our existing concerns about inventory, pricing pressure and competition are enough to keep us on the sidelines."
Armacost, who doesn't own shares, has Qualcomm rated at market perform. SG Cowen or its affiliates intend to offer investment banking services to Qualcomm.
The outlook is particularly positive for Qualcomm given events of the past few months, which included tight customer spending, the SARS outbreak, and an excess of inventory, particularly in Asia.
Armacost expects Qualcomm to report net income of 30 cents to 31 cents a share on revenue of $914 million for its fiscal third-quarter. The company reported net income of 24 cents a share on revenue of $721.3 million in the year-ago quarter.
The San Diego-based company is expected to report net income of 30 cents a share on revenue of $900 million, according to the average estimate of analysts polled by Thomson First Call (News - Websites).
Tim Luke, an analyst with Lehman Brothers Inc., said Qualcomm likely met his target of shipping 23 million chips during the quarter. Luke projects Qualcomm will ship an additional 20 million in the fiscal fourth-quarter.
Luke said Qualcomm has experienced some improvement in overall business trends since the end of the fiscal third-quarter.
"We believe the U.S. (business) is on track led by solid trends at Verizon," the analyst said. "In India, CDMA (technology) is progressing with a new suite of promotional offers. We believe a regulatory update (in India) in the next one to two weeks should also help.
"With respect to China, we believe the subscriber picture is improving with some inventory progress," Luke said.
Luke, who doesn't own shares, expects Qualcomm to report net income of 30 cents a share for the fiscal third-quarter. The analyst didn't provide a quarterly revenue projection but said Qualcomm should report revenue of $3.2 billion for fiscal 2003.
Luke has Qualcomm rated at overweight. Lehman may perform investment banking services for the company.
-By Tom Becker, Dow Jones Newswires; 201-938-2020
Thanks Mindy for your posts.
rllavoie
Earnings Conference Call
QUALCOMM will host a conference call to discuss its third fiscal quarter 2003 earnings results on Wednesday, July 23, 2003 from 2:30 p.m. to 3:30 p.m. (PDT). The conference call will be web cast live on QUALCOMM's web site at www.qualcomm.com. Financial and statistical information to be discussed in the conference call will be posted on QUALCOMM's Investor Relations web site at www.qualcomm.com immediately prior to the commencement of the conference call.
Dell readies new PDA, Smartphone.
http://smallbusiness.yahoo.com/business_technology/technology_news/hardware_news.html?s=articles/200...
ROUND ROCK, TEXAS - Dell Computer has revealed that the next generation of its Axim handheld will include both Wi-Fi and triband radios, signaling a new wave of mobile productivity. In addition, an executive at the company's headquarters here said Dell plans to develop a device based on Microsoft's Smartphone platform.
The next generation Axim will allow users to switch between Wi-Fi networks and CDMA or GSM networks. Due out in 2004, the device will likely support 802.11g, which offers backward compatibility with 802.11b and speeds of up to 31Mbps.
The Axim will also include Bluetooth to permit synchronization with client devices, including notebooks, said Anthony Bonadero, Dell's director of wireless product marketing, during a set of exclusive briefings arranged for InfoWorld here this week.
"You could call it a Pocket PC[-based] GoodLink or BlackBerry device," Bonadero explained. "When we went out the door with Good [Technology as a new partner] a couple of months back, we made it very clear we are working with them as well as others to define the next generation of products."
Whether Dell becomes one of the first vendors to ship a device that caters to both Wi-Fi and public switched networks is problematic, according to David Hayden, principal analyst at MobileInsights in Palo Alto, Calif.
"Motorola and Proxim are in a deal to do just about the same thing," Hayden said.
The real question is whether there are any practical applications that need this capability. "There are so many different vendors of hot spots that if you have to sign up for your cellular plan, your T-Mobile plan, and your Boingo plan in order to use this, is it really cost-justified?" Hayden said.
On the plus side, Hayden said it will benefit enterprise sales people that need both networks to negotiate the intricacies of closing a major deal, for example.
Dell's vision is to see the Axim become a mainstream mobile device, with its release timed to coincide with advances in mobile networks. "We see the 2.5G network really starting to mature. GSM is our first choice [for support] because of global reach. CDMA is also an alternative," Bonadero said.
In addition to supporting Microsoft's PocketPC operating system, the next generation Axim will have a multiday battery life, Bonadero said. On the processor side, Dell will not attempt to reinvent the wheel. "We're not talking about a single chip solution which would be the kind of innovative thing if you were to mix Wi-Fi technology with GSM and CDMA radio technology on a single silicon chip," he said.
Bonadero said users will be able to choose whether to "populate or depopulate" the device with either or both radios, depending on their data or voice needs.
"We do think that this device has to have the ability to browse -- internet capabilities -- and it has to have voice capabilities," Bonadero said.
Smartphone
Meanwhile, Bonadero said Dell is likely to release a cell phone based on Microsoft's Smartphone. He joked that companies typically wait for Microsoft to get to the third release of an operating system before adoption. The same will most likely be true of Dell's support for Smartphone, he said.
"Version one [of Smartphone] does good things with data, but it's not so good for voice," Bonadero said. "If Microsoft keeps focusing on it, they will get it right."
Other details about Dell's forthcoming Smartphone, including availability and pricing, were not available.
Dell's wireless strategy has to date been focused on driving business back to core product lines, including servers, PCs, and notebooks. However, Bonadero said the company has started investing more internal resources on mobile and wireless product given its profitability on a per-unit basis.
"We didn't know these sorts of margins still existed in computers," Bonadero said of Dell's foray into PDAs with the Axim.
Pajaso-
The difference between INTC and AMD, as compared with QCOM nad NOK (or TI) is that INTC doesn't get paid a royalty when competing chips are used.
As I understand it, QCOM does get a royalty from the manufacturer of a phone whenever a manufacturer uses a CDMA chip in its phone, no matter who manufactures the chip. Sure, QCOM may have a smaller share of the chip manufacturing market but the pie will be bigger AND QCOM still gets paid a royalty on a percentage of the cost of the phone for that portion where others make the chips.
IronAir, Thanks for the Gorilla analysis. I think it is right on.
RLL
Any comments ont this?
"10:44AM Qualcomm lower amid competitive concerns (QCOM) 32.18 -0.65: Hearing that Fulcrum comments contributing to early weakness in the stock. In a recap of a Texas Instrument event yesterday, firm says TXN is going on the defensive introducing a cdma2000 product in Q3 to directly compete with QCOM. According to firm, this is new market initiative, opening up a potential of about 20% of the handset market to TXN. Because of a prior agreement this is not expected to result in royalty payments from TXN to Qualcomm, but handset manufacturers may still be required to do so depending on individual agreements in place. Specific details of the new product were not provided."
I always assumed that TI would have to pay QCOM a royalty on any chips that it makes. Here it suggests otherwise, but handset makers "may" have to pay QCOM a royalty. Hopefully the result is that QCOM's share is smaller but the pie is much larger.
I agree. QCOM's story still shines, but the FUD mongers keep spewing their crap. I wouldn't mind, but the stock price is definitely taking a hit.
Just think, things are going this well for QCOM and China and India are not meeting expections. Imagine if things pick up in those markets.
I hope that management is taking advantage of these low prices to carry out their stock buy-back plan.
RLL
Reuters
Qualcomm's strong growth might be ending-analysts
Thursday April 24, 3:39 pm ET
By Yukari Iwatani
http://biz.yahoo.com/rc/030424/tech_qualcomm_1.html
CHICAGO, April 24 (Reuters) - Wireless telephone chipmaker Qualcomm Inc.'s (NasdaqNM:QCOM - News) string of exceptionally strong earnings results might be coming to an end, as growth from China and India disappoint and it faces greater competition, analysts said on Thursday.
The San Diego-based company late on Wednesday posted a higher quarterly net profit and doubled its revenue, but it also acknowledged slower-than-expected growth and an oversupply of chips in Asia -- two issues it had refuted until now.
Shares of Qualcomm fell 46 cents, or 1.4 percent, to $32.52 in afternoon trading on Nasdaq after rising as high as $33.90 in the morning.
"They blip like this and everyone draws the proper conclusion the story isn't as good as it was two quarters ago," said Todd Bernier, wireless analyst with Morningstar. "They've probably got another quarter or two of good strong growth like this but then it's over. It gets murkier."
Qualcomm raised its earnings guidance for its fiscal year ending in September, but it cuts its phone shipment estimate for calendar 2003. Investors are realizing the outlook implies a weaker second half of the year, analysts said.
DOUBTS DESPITE DOUBLE-DIGIT GROWTH
While other telecommunications equipment companies have been hurt by the sluggish economy and lower industry spending, Qualcomm has consistently outperformed its peers on the strength of its CDMA wireless technology.
Qualcomm owns most of the patents to CDMA, or Code Division Multiple Access, the dominant wireless technology in U.S. networks and the second most-common phone technology in the world. It licenses its technology and provides more than 90 percent of the chips for CDMA phones.
As other equipment companies cut costs to stem massive losses, the company has been seemingly immune to the downturn, enjoying high double-digit growth. Qualcomm's shares have fallen only 6 percent since a year ago while Standard & Poor's communications equipment index has fallen nearly 40 percent.
Even so, the company has been unable to shake persistent worries about sustaining its growth, a concern that now seems justified, analysts said.
Qualcomm's fiscal second-quarter revenue grew more than 40 percent to $1.0 billion from a year ago, but was down slightly from the first quarter. The company expects revenue to fall again in the current quarter although it will be up 27 percent from a year ago.
Qualcomm raised its full year guidance, but even that only accounts for the better-than-expected profits reported in the fiscal second quarter, analysts said.
"While it looks like the company was guiding up, once you worked through the numbers, you had to take your chipset estimates down for September in order to get into guidance," said Matthew Hoffman, analyst with SoundView Technology.
CHINA AND INDIA DISAPPOINT
Qualcomm counted on the China and India markets to drive growth this year, but India delayed the commercial launch of its CDMA wireless service by a month and China has seen a slowdown in demand. The company admitted to an oversupply of phones in Asia.
"They're acknowledging what most of us have known. For some people, it's alarming because it means they don't have another rabbit in their hat," said Alex Vallecillo, senior portfolio manager of Armada Funds, which owns Qualcomm stock.
Justin McNichols, portfolio manager of San Francisco-based Osborne Partners Capital Management, said his firm sold its Qualcomm shares last month when they hit the high $30s.
"The stock becomes overvalued in the high $30s based on the realistic long-term growth rate (and) the potential for an inventory problem," he said.
Qualcomm also faces the threat of losing their stranglehold on the CDMA market as Nokia (NOK1V.HE) and Samsung Electronics Co. (KSE:05930.KS - News), the world's No. 1 and No. 3 mobile phone makers, make CDMA cell phones based on their own chips.
While the company's outlook is gloomier than the rosy picture it presented as recently as last month, it is still in a good long-term position, analysts said.
Qualcomm might see strong growth again if demand in India and China pick up. It also stands to gain from the launch over the next few years of WCDMA service, which lets users surf the Web wirelessly at super-high speeds via mobile devices.
"I'm not ready to concede its game, set, and match for their growth, but in the next quarter or two, the growth is not going to appear on paper probably as large as it did in the last few quarters," Vallecillo said.
Nice.
How about sharing your email here. I assume that it said that Nok has been paying QCOM royalties for years.
RLL
New Nokia Phones Target CDMA Market, Report Says
By Kenneth Li Senior Writer
03/13/2003 04:45 PM EST
http://www.thestreet.com/_yahoo/tech/kennethli/10074055.html
Whoops. In a mailing slip-up, Nokia reportedly announced the release of five new phones geared toward North American customers.
The world's largest handset manufacturer inadvertently mailed a press release to Finnish financial analysts, saying it plans to launch five phones using code division multiple access, or CDMA, technology, according to a Dow Jones Newswires report. The phones are expected to be officially announced at next week's annual wireless confab, the CTIA show, in New Orleans.
Nokia couldn't be reached for immediate comment.
Although Nokia is the leading handset manufacturer worldwide -- accounting for 40% of all phone sales -- the company is playing catch-up to other companies in the CDMA handset arena. Nokia has refrained from delving too deeply into the CDMA market in the past, declining to pay a licensing fee to CDMA pioneer and intellectual patent holder Qualcomm. CDMA phone manufacturers are required to pay a licensing fee based on the volume of sales to Qualcomm.
CDMA technology is the prevailing wireless standard in the U.S., used by the country's largest wireless carriers, Verizon Wireless and Sprint PCS.
Analysts said that in the past Nokia and Motorola have tried developing their own CDMA chipsets, but their efforts were considered technologically inferior. Motorola currently purchases chips from Qualcomm for its CDMA handsets.
Nokia American depositary receipts rose 61 cents, or 4.6%, to $14.02 in a market-wide rally Thursday.
Why isn't COCO joining the party today? Added to the Midcap 400 yesterday. I would expect that to be a good thing. I sold last week at $37.62. Waiting to get back in on a discount. Missed the $35.10 opportunity.
Let me join Rich in thanking you for your recap. Thanks for the effort.
RLL
COCO - Revenues Increase 56% on Population Increase of 38%, Driving a 73% Increase in Net Income for Corinthian Colleges' Second Quarter of Fiscal 2003.
http://biz.yahoo.com/prnews/030129/law035_1.html
BRCM's founder, president and CEO Henry Nicholas resigned yesterday citing family problems. Better be ready to jump quick. http://biz.yahoo.com/djus/030123/1954001139_1.html
Stowboat, how did you get so lucky, IHUB only gave me to the year 2103[G].
RLL
Qualcomm Rings Up Solid Quarter
By Kenneth Li
Senior Writer
http://www.thestreet.com/_yahoo/tech/kennethli/10064094.html
01/22/2003 07:10 PM EST
Updated from 6:23 p.m. EDT
What tech downturn?
Strong sales of cell phones using Qualcomm's (QCOM:Nasdaq - news - commentary - research - analysis) code division multiple access wireless technology in China and India drove the company's first-quarter profit and sales sharply higher.
The San Diego company, which pioneered CDMA technology used by Verizon Wireless and Sprint PCS (PCS:NYSE - news - commentary - research - analysis), also raised forecasts for the next quarter and full year.
Qualcomm reported earnings of $241 million, or 30 cents a share, according to generally accepted accounting principles, up from $139.2 million, or 17 cents a share, a year earlier. Sales were $1.1 billion, up from $692.6 million a year ago.
Excluding losses in its strategic investments, the company churned out earnings of $345 million, or 42 cents a share, an 83% improvement over year-ago earnings of $190 million, or 23 cents a share.
Qualcomm reported "pretty clean numbers," said Deutsche Bank Securities analyst Brian Modoff. "There weren't too many one-time charges. It was pretty straight." Deutsche Bank has done investment banking for Qualcomm in the past. Modoff does not own shares.
"It's a beacon hope in a sea of wireless miseries," Modoff said.
The company now expects fiscal second-quarter earnings per share to be 34 cents to 35 cents, a 50% on-year increase from the same period last year. The figures are based on the assumption that it will ship 27 million chips. A company executive said it already was completely booked for the chip-shipment targets for the second quarter.
For the full fiscal year 2003, the company expects to earn $1.34 to $1.39 per share, reflecting a 37% to 42% improvement from 2002. Sales are expected to grow 28% to 33% on an annual basis. Those estimates are based on the expectations for the industry to sell approximately 105 million to 112 million phones, with a 10% decrease in the average selling prices of these phones.
To be sure, some Wall Street analysts worry that the company, which has raised guidance on chip shipments on several occasions, may cause a backlog on inventory. Bears point to the cautious outlook this month of Samsung, the world's third-largest phone maker. Samsung is Qualcomm's largest customer for CDMA chipsets for its cell phones.
"We have not been identifying any significant pockets of inventory," said a company executive in response to an analyst's question on a conference call. "We don't see inventory issues. We're spending more of our time chasing shortages."
Also, Qualcomm's results confirm another worrisome trend in the wireless sector. Average selling prices of phones declined 3%, compared with the same period last year. For 2003, the company said it expects the average selling prices for phones to decline about 10% to $188.
Nonetheless, investors liked what they heard Wednesday. Ahead of the report, Qualcomm shares closed the day down 27 cents, or 0.7%, at $36.69. In after-hours activity, shares jumped $1.51, or 4.1%, to $38.15.
"We achieved record revenues and earnings in both our [licensing] business and our [semiconductor] business, with shipments of approximately 29 million MSM phone chips during the first fiscal quarter," said Qualcomm Chief Executive Irwin Mark Jacobs. "We are continuing to see very strong demand in the Americas and throughout Asia for our industry-leading chipsets and system software."
Zeev OT
I just went from lurker to subscriber. Thanks for your great work. I hope your charity gets its cut.
rlavoie