Qualcomm slips in third quarter, but is optimistic about the full year
Chipmaking giant Qualcomm (QCOM), which has bucked the down market during the recession, continues to perform relatively well. Today, the San Diego-Calif.-based company reported that its fiscal third-quarter profit dropped 1.5 percent to $737 million, or 44 cents per share. That's down from $748 million, or 45 cents per share, one year earlier. Revenue was down just 0.3 percent to $2.75 billion.
Qualcomm, which makes chips for cell phones and licenses its CDMA-based technology to handset manufacturers and wireless equipment makers, says that there is healthy demand in the market for cell phones, a good sign for the economy.
Paul Jacobs, the chairman and chief executive officer, went on to predict that the fourth quarter would also be solid, with the company selling between 88 million and 92 million wireless chips for cell phones. He also raised the company's full year revenue forecast to $2.55 billion to $2.75 billion. Things could get even better, given that Texas Instruments (TXN) has said that it will get out of the baseband-processor business.
But perhaps it was less than investors had hoped. In after hours trading the stock initially sank nearly 5% before recovering. The concerns: that perhaps demand for mobile phones won't be as great as expected. Qualcomm's numbers did come in a little below some analysts expectations and there are worries that if the economy doesn't turn around, sales will head south. Besides that, while the Chinese market holds great promise, some network buildouts have been delayed causing some uncertainty.
But despite those concerns, Qualcomm performed well and its own outlook is good. While revenue was flat, free cash flow from operations rose by $1 billion --or 25% -- over the same period last year. The company has $15.7 billion in cash, up from $14 billion in the previous quarter.
For the full year, expect Qualcomm to generate between $10.25 billion and $10.45 billion in revenue.