Solid Showing at Qualcomm

Shares rise after a strong fourth quarter.
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Qualcomm (QCOM) - Get Report surpassed fiscal fourth quarter targets and put guidance in its customary spot, slightly below Wall Street's estimates.

The San Diego wireless tech titan posted adjusted earnings of $705 million, or 42 cents a share. That compares with a 32 cent pro forma profit a year ago. Analysts were looking for adjusted earnings of 41 cents, according to Reuters Research.

Total sales for the quarter ended Sept. 24 were $2 billion, up 2% sequentially and 28% above the year-ago levels. Analysts expected $1.97 billion in sales for the fiscal fourth quarter just ended.

For the fiscal year, adjusted net earnings were $2.8 billion or $1.64 a share, up 42% for the year. Sales grew 33% to $7.53 billion.

"Our record performance in fiscal 2006 was a direct result of the focus and innovation delivered by the employees of Qualcomm and the success of our partners," CEO Paul Jacobs said in a press release Thursday. "We achieved record revenues, net income and operating cash flow."

Looking ahead to the fiscal first quarter results, Qualcomm expects adjusted net income of 43 cents a share on revenue somewhere in the range of $1.98 billion and $2.08 billion. Street expectations were for a 44 cent pro forma profit on $2.07 billion in sales.

For fiscal 2007, Qualcomm expects an adjusted profit of $1.44 on sales in a range between $8.1 billion and $8.6 billion. Analysts were expecting pro forma profit of $1.82 on $8.6 billion in revenue.

Qualcomm raised its CDMA handset sales estimate for 2006 to 294 million from 290 million previously.

Qualcomm shipped 207 million chips in fiscal 2006, up from 151 million in fiscal 2005. The company says, as of September 2006, there were "approximately 402 million subscribers using third generation (3G) CDMA-based networks worldwide as compared to approximately 273 million at the same point in 2005."

Qualcomm has been in a legal dispute with

Nokia

(NOK) - Get Report

over patent license fees. The current agreement between Qualcomm and Nokia expires April 9. The two sides are negotiating, but Qualcomm has quantified the impact on earnings if payments from Nokia stop. The net impact per quarter, says Qualcomm is about a nickel per share.

Observers say that is pretty much in line with expectations.

Qualcomm promised to defend its technology patents.

"We will take the necessary actions to ensure that the technology advances embodied in our intellectual property portfolio are protected and that we are fairly compensated for their use," CEO Jacobs said. "We will continue to fund an expensive but necessary battle to defend our business in the interest of our shareholders."

Qualcomm shares rose 19 cents to $36.55 in after-hours trading Thursday.