SAN DIEGO—Qualcomm Inc. raised its revenue estimates for its third quarter ending in June, indicating it expects revenue at or slightly above earlier forecasts of $1.77 billion to $1.87 billion based on strong demand for its chipsets destined for both low-end and 3G phones.
The San Diego-based firm based its revised revenue estimates on expected shipments of 53 million to 56 million baseband chips, compared with about 36 million in the year-ago quarter and 49 million in the prior quarter.
Qualcomm’s stock bucked the day’s trend on Wall Street, rising slightly to $51.39 per share. Qualcomm plans to hold an analyst meeting Thursday, at which analysts expect more guidance on Qualcomm’s market share projections and technology road map.
Qualcomm’s improved guidance reflects stronger-than-anticipated orders for low-end chipsets in India and China and strengthened demand for CDMA2000 1x EV-DO chipsets in the United States and South Korea, according to the investment banking firm CIBC World Markets, which raised its target price for Qualcomm’s stock to $60 from $56.
According to investment banking firm UBS Warburg, risk factors relating to Qualcomm’s estimates include competition in W-CDMA chipsets from L.M. Ericsson, Freescale Semiconductor Inc. and Nokia Corp./Texas Instruments Inc. Qualcomm’s failure to achieve W-CDMA market share against these competitors could hurt earnings, as could an erosion of related royalty rates due to W-CDMA competition. Slowdown in handset demand could also slow Qualcomm’s earnings growth, UBS said.
Whether U.S. consumers jump on 3G services and the more expensive handsets required to access them, Qualcomm still benefits from network operators’ demand for 3G chipsets in their new phones, according to a Yankee Group analysis.
