SAN DIEGO—Qualcomm Inc. boosted its financial guidance for the third fiscal quarter ending June 25 due to what the company said was strong demand for its chips for W-CDMA handsets and CDMA network gear.
The San Diego-based chip vendor said its pro forma revenues for the quarter are forecast to be about $1.91 billion to $1.96 billion, based on the shipment of about 55 million Mobile Station Modem chipsets. Qualcomm shipped about 36 million chipsets in the year-ago quarter and about 49 million in the prior quarter. Qualcomm’s guidance represents a significant jump from previous guidance of between $1.77 billion to $1.87 billion in revenue based on projections of 53 million to 56 million chipset sales.
Chief Executive Officer Paul Jacobs attributed the uptick in projected earnings to strong demand for W-CDMA chipsets for handsets, chips for CDMA2000 infrastructure gear (notably EV-DO Revision A) and operator migration from W-CDMA to HSDPA. According to a CIBC World Markets note to investors, Qualcomm’s picture translates to strong demand for 3G handsets and infrastructure and sales of low-end CDMA products in emerging markets.
Qualcomm’s stock hovered at $42.28 per share by early afternoon, just slightly down from the $42.70 at the market’s opening.
Qualcomm couched its guidance in “pro forma” numbers. Such financial numbers allow a company to put its best foot forward with regard to earnings by excluding certain items and activities—in this case, Qualcomm’s Strategic Initiatives business, estimated, share-based compensation, tax benefits relating to prior years and acquired, in-process research and development. Pro forma financial guidance follows less stringent guidelines than generally accepted accounting principles.
Last week, Qualcomm competitor Texas Instruments Inc. also upgraded its forecast to total revenue of $3.63 billion and $3.78 billion, of which the bulk is attributable to semiconductor sales, compared with its previous estimate of $3.46 billion to $3.75 billion. The new estimates included a one-time $70 million cash payment from patent-related litigation and undisclosed amount of sales tax benefit in the quarter.
Also last week the Semiconductor Industry Association forecasted worldwide sales to grow nearly 10 percent to around $250 billion for 2006, propelled by the mobile handset market, particularly in 3G devices. The SIA’s previous forecast, from November 2005, forecast nearly 8 percent growth this year.
