Qualcomm Guides Higher
Qualcomm (QCOM) raised fiscal second-quarter targets, citing a surge in cell phone sales and chip demand.
The San Diego-based wireless tech titan raised guidance for the current quarter ending March 26, calling for pro forma net income of 40 to 41 cents a share on sales of about $1.78 billion. Analysts were looking for an adjusted profit of 36 cents a share on $1.71 billion in revenue, according to Thomson First Call.
New cell phones were more popular than Qualcomm initially expected in the prior quarter ending in December. The company says 67 million code division multiple access, or CDMA, phones were sold last quarter, about 6 million more than originally expected.
This translates to about $66 million in additional revenue to be booked in the current quarter, says JP Morgan Chase analyst Ehud Gelblum, who estimates that Qualcomm gets a 4.6% royalty from each handset sold. Gelblum has a buy rating on the stock.Chip sales for the fiscal second quarter also seem to be stronger than previously expected. Qualcomm says chip shipments will reach about 48 million, beating prior targets by about 2.5 million. Gelblum estimates the upside will contribute about $50 million more to second-quarter top line, based on an average selling price of $20 a chip. The tech shop also raised its quarterly dividend to 12 cents a share from 9 cents. Qualcomm's shares rose 96 cents to $48.20 in late-morning trading Tuesday.
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