November 4, 2005

As demand for and shipments of Qualcomm Inc.'s chips took off, so did the company's financial performance.

Qualcomm, the world's second-largest chip maker for mobile devices, posted fourth-quarter net income of $538 million, or 32 cents per share-a 37-percent increase from a year ago when the company reported net income of $393 million, or 23 cents per share.

"Our record financial results reflect the accelerating migration to CDMA throughout the world," said Paul Jacobs, chief executive of Qualcomm.

Wall Street popped on the news, sending Qualcomm's stock up almost 8 percent to $43.58 per share.

The company's revenues rose from last year's $1.12 billion to $1.56 billion, up 40 percent and on target with the company's projections.

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For the full fiscal year, Qualcomm's revenues reached $5.67 billion, up 16 percent from 2004's revenues, and the company's net income reached $2.14 billion, up 25 percent from 2004.

In the coming quarter, Qualcomm said it expects to earn revenues of between $1.67 billion and $1.77 billion, shipping more than 50 million W-CDMA and CDMA handsets and 46 million to 48 million phone chips.

For the next fiscal year, the company forecast revenues of between $6.7 billion and $7.1 billion.

"Looking forward, we anticipate 2006 to be yet another strong growth year with new CDMA handset shipments growing approximately 30 percent year-over-year," said Jacobs.

"The wireless market continues to evolve at a rapid pace and Qualcomm will continue increasing R&D investments in fiscal 2006 to capture the many opportunities ahead and maintain or extend our leadership position in the market."

ThinkEquity Partners L.L.C. analysts agree with Qualcomm's outlook, adding, "We are establishing our full-year 2007 estimates that project continuing growth in both top and bottom-line estimates.

Driven by strong growth in both its MSM and licensing businesses, Qualcomm continues to execute well and we continue to believe that the company remains the best play in the worldwide transition to 3G. We are reiterating out Buy rating and $50 price target."

Source: RCR News