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Qualcomm's Quarterly Profits Jump As Sales Surge



RELATED SYMBOLS: (QCOM)(NTRS)(IT)

Jan 23, 2003 (The San Diego Union-Tribune - Knight Ridder/Tribune Business News
via COMTEX) -- Again defying the slump in the wireless industry, Qualcomm
yesterday posted strong earnings results for its fiscal first quarter, thanks
mostly to healthy demand in Asia.

The San Diego company said its net income for the quarter ended Dec. 29 was $241
million, or 30 cents a share a percent increase from a year ago and a 30 percent
increase from the previous quarter. Revenue was $1.1 billion, up 57 percent from
the year-ago quarter.

Sales of its cell-phone chips nearly doubled, with Qualcomm selling some 29
million chips in its first fiscal quarter, compared with 15 million a year ago.

Analysts said Qualcomm is continuing to expand the market for its wireless
technology, called Code Division Multiple Access or CDMA. Qualcomm owns the
primary patents for CDMA, which is used in more than 135 million wireless phones
worldwide. The company makes money both through the sale of cell-phone chips and
by collecting royalties on its patented technology.

"I've got to say these are pretty impressive results," said Michael King, a
wireless analyst for Gartner Group, a market research firm.

Qualcomm attributed its results to demand in Asian markets such as South Korea
and Japan, which are rolling out next-generation wireless services such as
sending e-mail and digital photos on cell phones. Increased demand in new
markets, such as China and India, which just began offering CDMA phone service,
also helped boost Qualcomm's bottom line.

"Part of the story is growth in emerging markets like China and India, and part
of it is it's doing much better relative to competing technologies in North
America and Latin America and other places," said Shawn Campbell, analyst with
Northern Trust Corp.

Irwin Jacobs, Qualcomm's chairman and chief executive, said the company expects
further significant growth in China and India this year.

King said the reliance on China could be a potential trouble spot for the
company.

"It is a bit worrisome that Qualcomm is putting that much emphasis on China
because as big as a market as China is, it has not proven itself to be a
profitable market," he said.

Because of anticipated growth in many of its markets, Qualcomm said it was
increasing its earnings forecast for fiscal 2003. The company said it
anticipates that its revenue, excluding investments, will grow 28 percent to 33
percent and earnings per share will be $1.34 to $1.39, an increase of 37 percent
to 42 percent from the previous year.

Qualcomm based its estimate on projected sales of 105 million to 112 million
CDMA phones in 2003. The company previously had forecast earnings of $1.15 to
$1.20 a share on revenue growth of 19 to 23 percent.

Still, Jacobs said company was being cautious in its projections, especially for
the second half of the fiscal year.

Qualcomm also announced yesterday the retirement of Donald E. Schrock, executive
vice president and group president of the wireless chip division.

Schrock, who will remain with the company until Aug. 1, said he is retiring to
spend more time with his family.

Sanjay Jha, a Qualcomm veteran, was appointed to replace Schrock. Jha joined the
company in 1994 and was in charge of hardware design engineering for Qualcomm's
wireless chips. Since 2000, Jha has helped identify new markets for Qualcomm's
core technologies.

--Reuters contributed to this report.


By Jennifer Davies
To see more of The San Diego Union-Tribune, or to subscribe to the newspaper,
go to http://www.uniontrib.com

(c) 2003, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune
Business News.

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