Jan. 28 (Bloomberg) -- Qualcomm Inc., the world’s biggest maker of mobile-phone chips, reported a 56 percent drop in first-quarter profit and cut its annual sales forecast after the recession curbed growth and hurt its investments.

Net income fell to $341 million, or 20 cents a share, from $767 million, or 46 cents, a year earlier, the San Diego-based company said today in a statement. Revenue rose 3.2 percent to $2.52 billion in the period, which ended Dec. 28.

Job losses and tightening credit have forced consumers to put off buying new phones, hurting demand for the semiconductors that run the devices. That has slowed growth at Qualcomm, which increased sales 22 percent on average over the past six years by tapping new markets and taking market share.

“Our fears of what has been happening have been confirmed by other companies and reconfirmed again by Qualcomm,” said Pablo Perez-Fernandez, an analyst at San Francisco-based Global Crown Capital. He cut his rating on the stock to neutral earlier today. “Handset vendors are pulling back on orders because demand simply isn’t there.”

Qualcomm fell $2.10, or 5.7 percent, to $34.72 in late trading after closing at $36.82 on the Nasdaq Stock Market. The stock dropped 9 percent last year.

Sales Forecast

Qualcomm predicted sales of $2.25 billion to $2.45 billion for the current quarter. That compares with an average estimate of $2.39 billion, according to a Bloomberg survey. The company said it wouldn’t forecast profit because of the unpredictability of demand.

For the year, Qualcomm forecast sales of between $9.3 billion and $9.8 billion, down from an earlier prediction of at least $10.2 billion. Still, the company expects the average price of phones sold using its technology to be $202, up from an earlier prediction of $195. That’s the basis on which its license revenue is calculated.

The lower forecast and investment writedowns are the result of a conservative outlook, Chief Operating Officer Len Lauer said in a phone interview. Most of the investment charges are tied to bonds, which still have value and continue to pay interest, he said.

“We are one of the few companies that slightly exceeded guidance for the first quarter,” Lauer said. “The second half is a different story.”

‘Dramatic’ Drop

In November, Chief Executive Officer Paul Jacobs said he had stopped hiring workers and would eliminate some research projects amid a “dramatic” fall in chip orders. That month, the company predicted first-quarter profit of 46 cents to 50 cents a share, excluding some costs. On that basis, analysts had estimated 47 cents.

Qualcomm blamed the credit crisis and shrinking global economy, saying they also affected the value of the company’s investments. The company reported $292 million in investment losses last quarter. It had forecast sales of $2.3 billion to $2.5 billion for the period. Analysts had predicted sales of $2.4 billion.

Jacobs said today there would be no widespread job cuts at the company.

Qualcomm surpassed Texas Instruments Inc. last year as the biggest maker of mobile-phone digital signal processors, the key chips in handsets. Texas Instruments released fourth-quarter results earlier this week, posting the smallest profit since 2002. The company also said it would cut its workforce by 12 percent.

Qualcomm’s technology has grown more popular with the rise of phones that offer high-speed Internet access. Unlike other chipmakers, Qualcomm gets most of its profit from licensing its technology, called code division multiple access, or CDMA.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: January 28, 2009 19:28 EST