Feature Article

January 31, 2013

Qualcomm Reports Quarterly Profits: Beats Wall Street Expectations

Qualcomm Inc., a supplier of mobile phone chips, recently reported whopping quarterly earnings and profits that have even beat Wall Street expectations.

The company also announced that it is raising its core financial targets for the year 2013, owing to the increasing demand for high-speed wireless and smartphone services.

While other chip makers, like Broadcom Corp and Texas Instruments, have faced sluggish demand, the shares of Qualcomm rose to a dramatic 6.4 percent on Wednesday’s late trade. It is the quarterly profits and pragmatic outlook of Qualcomm that have surprised investors, causing a rise in the shares of the company, states financial experts in New York. In addition, the company also announced the retirement of their chief financial officer on Wednesday.

Qualcomm Inc. significantly leverages the growing demand for Web-enabled devices and smartphones today. Global network operators are also showing a keen interest in Qualcomm’s high-speed wireless technology, like Long Term Evolution (LTE).

Talking about this new trend, Daniel Berenbaum, an analyst at MKM Partners, stated that the growing demand for wireless technology and smartphones is working in favor of Qualcomm. He views this quartet to be very strong for the company.

Besides earning revenue from its advanced mobile phone chip sales, the San Diego- based company also received a significant portion of royalties from phone makers that have technology license agreements with Qualcomm. As analyzed by Berenbaum, a few upsides in Qualcomm revenue came from chipset sales. However, royalties had an upper hand this time.

As compared to its previous target of $23 billion - $24 billion, Qualcomm has successfully raised the revenue guidance for the full year to a range of $23.4 billion - $24.4 billion. At the same time, it has increased its target for earnings per share to a range of $4.25 - $4.45 from a previous target of $4.12 - $4.32. For the fiscal first quarter ended December 30, 2012, Qualcomm reported a whopping growth in profit of $1.91 billion or $1.09 per share as against the profit of $1.4 billion or only 81 cents per share in the quarter a year ago.

With the dramatic rise in profits, the shares of Qualcomm rose to $67.60 in late trade in regular NASDAQ session. It is only in early April 2012 that the company’s shares reached at this level in the regular NASDAQ session.

Qualcomm is also optimistic about a strong growth in demand for their mobile phone chips in the emerging markets of Latin America and China.




Edited by Brooke Neuman


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