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Qualcomm Jumps to 12-Year High on Forecasts: Los Angeles Mover

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Qualcomm Forecast May Top Analysts’ Predictions
Qualcomm Inc. signage hangs in the company's booth at the 2012 International Consumer Electronics Show (CES) in Las Vegas. Photographer: Daniel Acker/Bloomberg

Feb. 2 (Bloomberg) -- Qualcomm Inc., the world’s biggest maker of mobile-phone chips, rose to a 12-year high after the company increased sales and profit targets for the quarter and year on growing demand for smartphones.

Qualcomm gained 2 percent to $60.73 at the close of trading in New York, the highest since the tech bubble burst more than a decade ago. The stock has risen 11 percent this year.

The company lifted its forecasts for phone shipments based on strength in India and China, and said smartphone demand is boosting chip sales and licensing income. San Diego-based Qualcomm owns code division multiple access technology, or CDMA, and can levy royalties on all 3G phones and networks, providing most of its profit. It is also the largest seller of chips that connect phones to mobile networks.

“They continue to execute as well as they ever have, which has always been excellent,” said James Faucette, an analyst at Pacific Crest Securities LLC in Portland, Oregon, who recommends the stock. “They’re now at a size and scale that is hard to disrupt competitively.”

Sales for the second quarter ending in March will increase to $4.6 billion to $5 billion, the company said in a statement yesterday. Analysts project $4.51 billion, the average of 31 estimates in a Bloomberg survey.

Full-Year Forecast

The company, with customers that include Samsung Electronics Co. and Apple Inc., also supplies applications processors, chips that run programs in mobile phones, and is trying to sell bulked-up versions for use in larger machines such as personal computers.

Qualcomm said sales for the fiscal year will rise 25 percent to 32 percent to a range of $18.7 billion to $19.7 billion. Earnings per share will climb to $3.36 to $3.56, the company said. Qualcomm had previously predicted revenue of $18 billion to $19 billion and profit of $2.80 to $3 a share.

Analysts had estimated earnings of $2.97 on sales of $18.47 billion, according to data compiled by Bloomberg.

“You’re looking at strength across the board,” Chief Operating Officer Steve Mollenkopf said in an interview. “We’re really taking advantage of strong smartphone growth.”

The average selling price of phones in the fiscal second quarter, used to calculate licensing revenue, will be $204 to $216, up from an earlier prediction of $197 to $209 per device, the company said.

Qualcomm said fiscal first-quarter net income rose to $1.4 billion, or 81 cents a share, from $1.17 billion, or 71 cents, a year earlier. Revenue climbed 40 percent to $4.68 billion in the period, which ended Dec. 31. Analysts on average projected profit of 75 cents and sales of $4.58 billion.

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

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