Wireless chipmaker

Qualcomm

(QCOM) - Get Report

swung to a quarterly profit and announced upbeat earnings estimates for next year, fueled by positive business developments in China and South Korea.

The company posted a fourth-quarter net profit of $190 million, or 23 cents a diluted share, compared with a loss of $75 million, or 10 cents a share, in the year-earlier period. Sales rose 34% to $874 million from $651 million last year.

Excluding charges related to amortization, goodwill and losses on Brazilian investments, Qualcomm's earnings jumped 63% to $250 million, or 31 cents a share, from $155 million, or 19 cents a share, last year. Pro forma sales were $840 million, up from $651 million.

Wall Street analysts expected the firm to earn 27 cents a share on revenue of $811 million, on a pro forma basis.

In September the company raised its chip-shipment estimates for the fourth quarter to 20 million units -- a target that it met, according to a company statement. The company also said it had seen strong demand in China, South Korea and the U.S. In the U.S.,

Verizon Wireless

and

Sprint PCS

(PCS)

both operate networks based on Qualcomm-created technologies.

"Qualcomm's highly focused business strategy enabled us to strengthen our position this year despite the challenges facing the global economy and the telecom sector," said Qualcomm Chief Executive Irwin Jacobs in a prepared statement.

Banc of America Securities wireless-equipment analyst Mark McKechnie, who has a neutral rating on Qualcomm's stock, said that "what's driving a lot of the near-term strength is the holiday season." He noted that Motorola, which has its own chipmaking plants, decided to shelve its plans for chips in its new T720 handset after reviewing Qualcomm's technology. Indeed, Motorola is buying CDMA 1X chips from Qualcomm. The T720 has been delivered in high volumes to U.S. carriers this fall. Banc of America hasn't done any investment banking for Qualcomm.

For the full year, Qualcomm earned $360 million, or 44 cents a diluted share, on revenue of $3 billion, compared with a net loss of $578 million, or 76 cents a diluted share, on revenue of $2.7 billion.

Pro forma earnings for the full fiscal year were $794 million, or 98 cents a share, on revenue of $2.9 billion. Last year, pro forma earnings were $710 million, or 88 cents a share, on revenue of $2.7 billion.

Looking ahead, Qualcomm expects first-quarter pro forma earnings to reach 35 cents to 38 cents a share. Wall Street analysts expect earnings of 29 cents a share. The company expects revenue to be 15% to 22% higher than in the fourth quarter. It also expects to ship 25 million to 27 million phone chips in the quarter.

For 2003, the company expects pro forma revenue to rise by 19% to 23% on the year, and earnings per share to be $1.15 to $1.20. The estimates are based on a projection that handset makers will sell 100 million to 105 million CDMA phones in 2003.

Qualcomm said the company's technology will cover about 20% of the world's wireless market by the end of this year, up from 17% last year.

Ahead of the earnings report, Qualcomm shares sank 91 cents, or 2.5%, to $34.94. The shares reversed their losses in after-hours trading, gaining $1.14, or 3.3%, to $36.08.