Qualcomm Inc (QCOM)

[khemara_qc]

Some important points to be remembered re Qualcomm

"This has obviously been an outstanding year for Qualcomm," Chairman and Chief Executive Irwin Jacobs said yesterday.

He said he expects Qualcomm's cell phone technology to continue to be adopted throughout the world.

Jacobs said 24 percent of the worldwide market for cell phones is based on Qualcomm's technology, up from 20 percent last year.

"We look forward to another strong year," he said.

For the current fiscal quarter, which ends in December, Qualcomm estimated that it will have revenue of $1.3 billion to $1.4 billion, with earnings of 24 cents to 26 cents per share.

Analysts were expecting earnings of 31 cents per share.

Qualcomm chief financial officer Bill Keitel said the difference between analysts' expectations and Qualcomm's forecast is largely due to the change in recording royalty revenue.

"The analysts haven't had all of the information, sufficient information on how to model the company based on our new methodology," Keitel said.

December is traditionally a big month for the sale of cell phones. Under the old accounting method of estimating royalties, that holiday revenue would appear in Qualcomm's first quarter earnings. Under the new method, Keitel said those sales won't show up until the second quarter.

"Under our new accounting methodology, that Christmas effect is going to be reported in our March results," he said.

The earnings estimates are also affected by the possibility that Qualcomm will pay more taxes next year and by the purchase of three companies, Keitel said.

Analyst Albert Lin of American Technology Research cautioned investors against having a "knee-jerk" reaction to Qualcomm's lower estimates for this quarter.

"The complications of the accounting are going to lead to misinterpretations of the stock," Lin said. "I'd say if the stock weakens, it's a good time to buy."

Excerpt from:
http://www.signonsandiego.com/news/business/20041104-9999-1b4qcom.html