Qualcomm Forecasts Revenue That May Top Analysts' Estimates; Shares Climb

Qualcomm Inc., the biggest maker of mobile-phone chips, posted first-quarter sales and profit and forecast revenue for the current period that topped analysts’ estimates, signaling demand for smartphones is increasing.

Sales in the current quarter will be $3.45 billion to $3.75 billion, San Diego-based Qualcomm said today in a statement. That compares with $3.14 billion, the average of estimates compiled by Bloomberg. The shares jumped in late trading.

Qualcomm, whose chips supply the radio function in phones, benefits as consumers buy more devices that can surf the Web. Smartphones require extra processors to run programs, and their higher price generates more licensing revenue for the company, which has patents covering much of the technology in 3G phones.

“This was a fantastic quarter by a company that is benefitting from multiple tail winds,” said Bill Kreher, a St. Louis-based analyst for Edward Jones. He recommends buying Qualcomm stock and doesn’t own the shares. “The outlook gives us confidence in the long-term road map.”

Qualcomm climbed as much as 6.5 percent to $55.25 in extended trading. The shares rose 34 cents to $51.86 at 4 p.m. New York time on the Nasdaq Stock Market. They gained 7 percent last year.

The company also increased its full fiscal-year outlook. Revenue will be $13.6 billion to $14.2 billion, Qualcomm said. That compares with an earlier forecast of $12.4 billion to $13 billion. Profit excluding some items will be $2.91 to $3.05 a share, up from $2.63 to $2.77 previously.

Net Income

Net income rose 39 percent to $1.17 billion, or 71 cents a share, in the three months ended Dec. 26, from $841 million, or 50 cents, a year earlier. Sales increased 25 percent to $3.35 billion. Analysts had predicted first-quarter profit of 59 cents a share on revenue of $3.2 billion.

The results were buoyed by “increased demand for smartphones and data-centric devices across an expanding number of regions and price points,” Chief Executive Officer Paul Jacobs said in the statement.

Earlier this month Apple Inc. said it will begin offering a version of its best-selling iPhone through Verizon Wireless. That probably increased Qualcomm’s baseband chip shipments by about 3 percent last quarter compared with the previous three months and will add a further 2 percent this quarter, according to FBR Capital Markets analyst Craig Berger.

Qualcomm gets the majority of its revenue from chip sales and the bulk of its profit from licensing. The company is trying to expand the reach of its chips beyond radios with a product called Snapdragon.

That chip is now running smartphones that use Google’s Android operating system. Qualcomm is also trying to sell it to makers of tablet computers.

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

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Enlarge image

Atheros Shares Surge on Report of Qualcomm Takeover

Jin Lee/Bloomberg

Paul Jacobs, chairman and chief executive officer of Qualcomm Inc.

Paul Jacobs, chairman and chief executive officer of Qualcomm Inc. Photographer: Jin Lee/Bloomberg

Jan. 7 (Bloomberg) -- Craig Barratt, chief executive officer of Atheros Communications Inc., talks about Qualcomm Inc.'s agreement to acquire his company for $3.1 billion in cash. He speaks with Bloomberg's Ian King at the Consumer Electronics Show in Las Vegas. (Source: Bloomberg)