2nd UPDATE: Qualcomm 4Q Profit Down 8.5% On Lower Revenue,
Margins
(Updates with analyst and executive comments.)
DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Qualcomm Inc.'s (QCOM) fiscal fourth-quarter profit
dropped 8.5% as charges, lower revenue and drooping margins weighed on results.
Shares rose 0.4% to $41.78 in after-hours trading, even as the cellphone-chip
maker provided a downbeat forecast for the current quarter. In recent weeks,
chip makers reporting earnings have generally topped Wall Street expectations,
though stocks for semiconductor makers have begun to slide from 52-week highs
last month.
Qualcomm, which also charges handset makers royalties for using its patents,
has been gaining market share in the third-generation, or 3G, handset market. In
September, Chairman and Chief Executive Paul Jacobs called worldwide demand for
mobile handsets "pretty good."
"I am very pleased with the performance of our businesses this past year
despite a challenging and uncertain global economic environment," said Jacobs in
a prepared statement.
Through 2010, Jacobs said, he expects demand for Qualcomm's 3G technology to
accelerate, helped by a continued move to the faster connections needed in the
still-growing smartphone market.
Looking ahead, Qualcomm expects fiscal first-quarter earnings of 54 cents to
58 cents on revenue of $2.55 billion to $2.75 billion. Analysts surveyed by
Thomson Reuters on average estimated 56 cents and $2.84 billion, respectively.
The company now expects fiscal-year earnings of $2.10 to $2.30 and revenue of
$10.5 billion to $11.3 billion. Analysts were looking for $2.32 and $11.61
billion.
Chief Financial Officer William Keitel warned that the average sales price of
its chips are expected to fall more than the recently seen 3% year-on-year
decline in fiscal 2010, although demand in high-end phones will likely help ease
the pricing pressure.
Meanwhile, Qualcomm reported a profit for the quarter ended Sept. 27 of $803
million, or 48 cents a share, down from $878 million, or 52 cents a share, a
year earlier. Analysts expected 52 cents.
Revenue dropped 19% to $2.69 billion. In July, Qualcomm predicted $2.55
billion to $2.75 billion. Equipment and service revenue declined 5.2%, while
license and development revenue decreased 37%.
Operating margin fell to 22.2% from 40% on the revenue drop and items
including a $230 million charge related to an expected fine by the Korea Fair
Trade Commission.
Qualcomm also said it had inked a 15-year extension of its licensing agreement
with Samsung Electronics Co. Ltd. (005930.SE).
Under the deal, Samsung will pay $1.3 billion plus royalties, according to
Derek Aberle, head of Qualcomm's licensing business. Qualcomm will also receive
300 patents and applications, he said.
-By Kathy Shwiff and John Kell, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com
(Roger Cheng and Jerry A. DiColo contributed to this article.)
(END) Dow Jones Newswires
11-04-091902ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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