Qualcomm released its fourth-quarter financial results ending Sept. 30 after the stock market closed last Thursday, showing a 10-percent increase in net income for the quarter compared with the fourth quarter of 1999, and just beating out analysts’ lowered expectations for returns per share for the quarter.
Qualcomm’s results included an 11-percent decrease in revenues, dropping from $716.3 million last year to $635.4 million this year. Even with the reduced revenues, the company posted an increase in net income from $182.9 million during the fourth quarter last year to $200.8 million this year. Net earnings per common share followed suit, rising from a return of 24 cents per share last year to a return of 25 cents per share this year.
“This year we continued to focus on improving profitability while investing in areas of future growth,” said Dr. Irwin Jacobs, chairman and chief executive officer of Qualcomm. “Central to our strategy is the belief that CDMA-based wireless data and Internet access applications will fuel industry growth for years to come.”
Marc Cabi, an analyst with Credit Suisse First Boston, predicted Qualcomm would return 24 cents per share for the quarter on revenues of $650.8 million.
Qualcomm acknowledged it went through highs and lows during the quarter as the South Korean market, the largest for CDMA technology, saw the end of telecom subsidies, sending prices higher and demand for the company’s chipsets lower.
Most analysts agreed with Qualcomm in expecting that demand will recover during the first quarter of 2001. China helped to temper the lows in South Korea as China Unicom decided to go ahead with its deployment of a CDMA-based network.
Looking toward 2001, Qualcomm said it is comfortable with analysts’ expectations of returns of $1.20 per share, though Cabi noted he saw potential for downward revisions given the likelihood for lower licensing revenues.
Qualcomm’s stock took a beating earlier in the week, falling 9 percent on Monday to $68.13 per share, after analysts voiced concerns about the company’s exposure to satellite company Globalstar Telecommunications, which posted disappointing financial results. In addition to being one of the five founding members of the satellite communications company, Qualcomm holds a 6-percent equity stake in a limited partnership with Globalstar to use its CDMA technology to develop satellite systems.
Qualcomm said its total exposure to Globalstar at the end of the fourth quarter was $618 million.
“The concern is that Qualcomm is a supplier to Globalstar,” Mark McKechnie, an analyst at Banc of America Securities told Reuters. “So certainly with the exposure there and Globalstar down 50 percent you can’t expect great things to happen to [Qualcomm].”
Qualcomm said it shipped 25,000 handsets during the fourth-quarter to Globalstar customers worldwide, bringing its total handsets shipped to the satellite company to 99,000.
Prior to Qualcomm’s financial release on Thursday, the company’s stock was up $1.31 for the day to $62.81 per share.
