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Qualcomm CEO: End-User Handset Market Hard To Predict
Updated:2008/11/14 11:24
Qualcomm Inc. (QCOM) Chief Executive Paul Jacobs said the macro-economic downturn is making it difficult to predict how consumer demand for cellphones will fare. "As we look at the end market, we're seeing significant growth," Jacobs told analysts during the company's annual analyst-day presentation on Thursday. " We're still seeing consumers heading for higher-end devices. That trend looks to continue even through this economic uncertainty." Qualcomm based last week's cut in fiscal-2009 estimates on the last downturn in 2001. But things are different this time, including a faster slowdown in orders as handset makers clear their inventory, he said. "We've been in discussions with the operators," Jacobs said. "They're somewhat cautious." That caution led to more dramatic pullback in orders by the original-equipment manufacturers than what the carriers were expressing, he said. Jacobs noted that the recent carrier reports have shown strong numbers. Still, Jacobs acknowledged that the inventory contraction will affect profitability in the next couple of quarters. But the larger number of markets, manufacturers and customers suggests the downturn won't be as sharp as before, Jacobs said. The growth in third- generation, or 3G, phones is another driver. Qualcomm believes 3G phones will make up a third of total cellphones next year, and reach 63% of handsets by 2012. Still, Qualcomm is seeing a lengthening of the replacement rates in countries such as Japan and Korea, offset by growth in areas such as Brazil and Mexico. The strengthening dollar has also hurt the company due to foreign-exchange issues. As a result, the company expects the average selling price to fall $9 to $195 in fiscal 2009. Jacobs said Qualcomm is bringing down expenses such as capping its headcount, but the company continues to invest in some projects. "While we're pulling in a little bit, we're not pulling in completely," Jacobs said. "As a leader, I believe that's the right stance to take." Jacobs said he expects Qualcomm's chips to power future cellphones based on Google Inc.'s (GOOG) Android operating system. Other opportunities include its potential deals with Nokia Corp. (NOK), with which the company settled in July. Jacobs said that no deal had been struck, but that the teams had "great respect for each other." Another opportunity for growth is in China, which has stalled in granting 3G licenses to the country's mobile carriers. Recent movement has Jacobs convinced that the country is close to deploying 3G technology, despite several false starts in the past. For fiscal 2009, pro forma operating income is expected to be between $3.7 billion and $3.9 billion, with pro forma expense growth of 10%. Steve Mollenkopf, head of Qualcomm CDMA Technologies, said he expects the average selling price of phones to hold up relatively well due to better features in phones and smartphones. He added the uncertainty in the second half of the fiscal year makes it tough to predict how things will go. Qualcomm ended fiscal 2008 gaining market share, and the focus for fiscal 2009 in keeping its momentum will be on signing new customers such as Nokia, Mollenkopf said. But he warned it would take time to win new accounts.
Source:Dow Jones ,China Telecom to Launch Handset IPTV Service (2008-12-22) ,Huawei to Roll out Android Handset Q3 2009 (2008-12-22) ,China Mobile Develops Own Handset Operating System With Lenovo (2008-12-22) ,Tata Tele launches low-priced handset in Rajasthan (2008-12-18) ,Lenovo Mobile's Expected Android Handset Appears Online (2008-12-17) ,China Telecom launches online shop for CDMA handsets (2008-12-17) ,ZTE Wins USA CDMA Network and Handsets Contract (2008-12-17) ,102 Handset Manufacturers Participate in CMMB Bids (2008-12-17) ,Spreadtrum, Mirics move China¨s mobile TV past handset to PC, laptop, netbook (2008-12-16) ,South Korea Opens Up to Foreign Handset Vendors (2008-12-11) ,ZTE Fuses Color and Design into Latest Handset Offering (2008-12-11) ,Nearly 50 Open Handset Alliance members now backing Android (2008-12-11) ,Open Handset Alliance announces 14 new members (2008-12-11) ,Nokia Completes Sale of German Handset Factory (2008-12-10) ,Kongzhong.com Launches New Handset Game (2008-12-10) ,Sony Ericsson Joins Open Handset Alliance (2008-12-10) ,China Mobile may extend free TD-SCDMA handset promotion (2008-12-5) ,Samsung Handset Tops Handset Cases Sales Chart (2008-12-4) ,NTT DOCOMO Cancels E71 Handset Launch Due to Nokia¨s Pullback (2008-12-2) ,Rumor: China Telecom to Sell CDMA Handsets at Cost (2008-12-2) |
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