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Qualcomm beats Street
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November 2, 2000: 7:28 p.m. ET
Mobile phone equipment maker also posted revenue decline
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NEW YORK (CNNfn) - Mobile phone equipment maker Qualcomm Inc. reported Thursday fiscal fourth-quarter earnings that beat Wall Street expectations, although its revenue declined because of lower sales in South Korea.
Qualcomm (QCOM: Research, Estimates), which makes digital wireless communications products and services based on the company's CDMA digital technology, said that its fourth-quarter net income rose to $200.8 million, or 25 cents per share, from $182.9 million, or 24 cents, in the same period last year. That was 1 cent above the mean of analysts' expectations for the quarter, according to earnings estimate tracker First Call.
The San Diego, Calif.-based company said that its pro-forma fourth-quarter revenue declined 11 percent to $635 million from $716 million in the same period last year, largely because of lower sales in South Korea after that country's government eliminated phone handset subsidies. The revenue figure is pro forma because the year-ago total included revenue from its consumer handset business, which the company sold in the second quarter.
Qualcomm's revenue was below the $675 million that Merrill Lynch analyst Michael Ching had expected.
"This year we continued to focus on improving profitability while investing in areas of future growth. Central to our strategy is the belief that CDMA-based wireless data and Internet access applications will fuel industry growth for years to come," said Qualcomm Chairman and CEO Irwin Jacobs in a statement.
Future projections
Qualcomm also offered a series of projections about its future revenue and earnings. They included:
- The company expects to ship about 14 million CDMA chipsets during the first quarter of fiscal 2001 compared with 11 million units in the fourth quarter of fiscal 2000.
- The company is comfortable with the current analyst consensus estimate of pro forma earnings per share of 28 cents in the first quarter of fiscal 2001. This estimate takes into account a decrease in contract services related to the troubled Globalstar satellite phone system.
- The company is comfortable with the current analyst consensus estimate of $1.29 pro forma earnings per share for fiscal 2001. It anticipates growth will be moderate in the first half of fiscal 2001 and accelerate in the second half as third-generation cdma2000 product volumes increase.
Qualcomm's projections assume that industry-wide CDMA phone sales will reach 90 million units in calendar year 2001 and that there will be a 20 percent decrease in the average selling prices of CDMA phones, upon which most royalties are calculated.
Qualcomm said Thursday morning it will delay the spinoff of its "Spinco" semiconductor unit until January at the earliest. The company blamed the delay of the initial public offering on "unfavorable market conditions." Chip stocks have slumped in recent months amid worries about sales growth.
The company's stock closed up $1.31 at $62.81 in regular trading. It tacked on an additional $5.94 to $68.75 in after-hours trading, as investors appeared to be pleased with the company's projections.
Qualcomm makes mobile phone chipsets based on Code Division Multiple Access, or CDMA, technology and also licenses that technology to other makers of mobile phones. The CDMA standard competes with one called Time Division Multiple Access or variations of TDMA known as Global System for Mobile Communications, or GSM. CDMA was adopted as the standard in the United States in 1993, but GSM is commonly used in parts of Asia and Europe. 
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Qualcomm
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