Qualcomm Inc. (NASDAQ: QCOM), the world largest phone-chip maker, is scheduled to release its fiscal second-quarter earnings after the closing bell on Wednesday, April 20, 2011. Analysts, on average, expect the company to report earnings of 80 cents per share on revenue of $3.62 billion. In the year ago period, the company reported earnings of 59 cents per share on revenue of $2.66 billion.
Qualcomm Inc. engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. The company operates in four segments: Qualcomm Code Division Multiple Access Technologies, Qualcomm Technology Licensing, Qualcomm Wireless and Internet, and Qualcomm Strategic Initiatives.
In the preceding fiscal first quarter, the San Diego, California-based companny's net income was $1.17 billion or $0.71 per share, compared to $0.84 billion or $0.50 per share in the same period last year. On an adjusted basis, the company earned 82 cents a share in the first quarter. Revenue increased to $3.35 billion from $2.67 billion. Analysts, on average, expected the company to report earnings of 72 cents per share on revenue of $3.20 billion.
At its last earnings call in January, the company said that it expects fiscal second quarter GAAP earnings per share in the range of $0.50 to $0.54. Non-GAAP earnings per share is estimated in the range of $0.77 to $0.81. Revenues for the quarter is forecast in the range of $3.45 billion to $3.75 billion. Qualcomm also said that it expects the average selling price of CDMA phones to rise about 5% in the 2011.
The company also raised its fiscal year 2011 guidance. The company now expects full-year GAAP earnings per share in the range of $2.32 to $2.46, compared to its previous forecast in the range of $2.08 to $2.22. Non-GAAP earnings per share is now forecast in the range of $2.91 to $3.05, compared to its previous forecast in the range of $2.63 to $2.77. Revenues for the year are now estimated in the range of $13.6 billion to $14.2 billion, compared to its earlier estimates in the range of $12.4 billion to$13.0 billion.Management also stated that its guidance excludes the expected positive outcome from its ongoing arbitration with Panasonic. Panasonic alleges that Qualcomm breached a licensing agreement and seeks the return of royalties paid to Qualcomm.
Qualcomm has benefited from strong consumer demand for smartphones and tablets, as well as other device categories. The company's next-generation snapdragon platform is making tremendous progress. A number of groundbreaking devices like Verizon iPhone, Google's Nexus One, HTC Desire, Sprint's EVO 4G and the Dell Streak tablet are powered by Snapdragon processor. Qualcomm still draws royalties from the GSM iPhone on AT&T (NYSE:T) through its patents, though the device does not employ Qualcomm's chips. The company was also a key launch partner for Windows Phone 7 and has its chips in the next generation of Palm devices coming from H-P later this year, including the TouchPad tablet.
Qualcomm also stands to benefit from growing demand for 3G data services. The company collects a royalty for every 3G device sold worldwide. 3G technology adoption increases the addressable market for which it sells chipsets In addition, it holds patents on CDMA technology and earns royalties on all CDMA mobile phone sales. In the near term, Verizon(NYSE: VZ) CDMA iPhone looks to be a boom for Qualcomm. Apple's (NASDAQ: AAPL) introduction of a CDMA version of the iPhone means Qualcomm will collect not only a patent royalty as it does with the AT&T iPhone, but since the Verizon iPhone also uses Qualcomm's wireless chip, the company will enjoy an added pop to its chip revenue.
Emerging super-fast 4G Long Term Evolution (LTE) technologies have become another boost for Qualcomm. The growing acceptance of LTE technology has prompted the mobile handset manufacturers to develop phones that will be compatible with this network. The 3G to LTE transition is underway globally with 156 operators in 64 countries currently investing in this transition. In the US, Verizon is rolling out its LTE network and AT&T (NYSE:T) plans to start its roll out in mid-2011.
During the quarter in review, Qualcomm's board of directors has approved a 13 percent increase in the company's quarterly cash dividend.
Among other developments, the company said last month that it did not foresee "any significant impact" to its supply chain from the earthquake and tsunami that struck Japan last week. "Qualcomm has multiple, geographically diverse sources for supply as well as production processes specifically designed to enable us to mitigate disruptions in our supply chain," read the statement.
The company's stock currently trades at a forward P/E (fye Sep 26, 2012) of 16.60 and PEG ratio (5 yr expected) of 1. In terms of stock performance, Qualcomm shares have gained nearly 25 percent over the past year.
Full Disclosure: None.
