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Updated from Jan. 19



sagged 6% Thursday after the wireless chip juggernaut's guidance disappointed Wall Street.

Qualcomm beat first-quarter earnings estimates by a penny late Wednesday, but the San Diego company said second-quarter numbers would fall short of expectations.

For its fiscal first quarter ended Dec. 26, Qualcomm earned $513 million, or 30 cents a share, which is up from the year-ago continuing operations profit of $411 million, or 25 cents a share. Excluding the results of the company's strategic investment arm, which Qualcomm considers noncore, latest-quarter earnings rose 17% from a year ago to 28 cents a share. That's a penny ahead of the Wall Street analyst estimate provided by Thomson First Call.

Revenue rose 15% from a year ago to $1.39 billion, which was in line with estimates.

"The deployment and expansion of third generation code division multiple access networks and devices continues to drive our results," said CEO Irwin Mark Jacobs.

But Qualcomm's outlook left something to be desired, as far as investors were concerned. The company guided Wall Street to expect second-quarter earnings of 26 cents a share, excluding the so-called QSI segment, which is flat with a year ago. Revenue will be around $1.4 billion. Wall Street had been targeting a 30-cent profit on sales of $1.49 billion. Qualcomm's 2005 guidance, for earnings of $1.18 a share on sales of $6.05 billion, hit the Thomson First Call consensus on the head.

Comparisons may be muddled a bit for now by the fact that Qualcomm has been changing its accounting for its core chip licensing business.

"I think they are allowing for seasonality and being conservative with their guidance," says ThinkEquity Partners analyst Jason Tsai, who has a buy rating on the stock. "I'm encouraged that they did not change their full year revenue number -- that may mean they see a stronger June quarter."

Others were more skeptical. "The quarter was right in line and 3G sales were very strong, but for the coming quarter I think we are seeing some inventory digestion," says a buy-side analyst who has been trading in and out of the stock. "The stock is selling off, but I think it will find support as people see this as a way in."

Early Thursday, Qualcomm dropped $2.59 to $38.48.