Tags:Nokia | CDMA | Verizon | Sprint

Chip maker Qualcomm Inc. posted a 5.5 percent increase in its fiscal second-quarter profits Wednesday and ¡ª unlike some wireless industry heavyweights ¡ª gave a modestly upbeat assessment of its prospects for the next three months and the rest of the year.

The company''s profit and revenue topped Wall Street''s expectations in the second quarter and its revenue projections were rosier than analysts expected, though its profit estimates were less impressive.

Qualcomm is benefiting from strong sales of high-end mobile phones that surf the Internet and offer speedier downloads of music and video.

The company earned $766 million, or 47 cents a share, during a three-month period ending March 30, up from $726 million, or 43 cents a share, the same period a year earlier. The latest period includes charges of 5 cents a share for stock-based compensation and a loss of 2 cents a share for its strategic investment unit.

Excluding those charges, Qualcomm earned 54 cents a share, above an average estimate of 52 cents a share among analysts surveyed by Thomson Financial.

Revenue rose 17.3 percent to $2.61 billion from $2.22 billion in the same period last year, above the average analyst estimate of $2.5 billion.

Qualcomm''s generally optimistic outlook came two days after rival Texas Instruments Inc. gave a tepid forecast for its current quarter, blaming weak demand for chips used in high-end mobile phones.

Nokia Corp., the world''s largest mobile handset maker, said last week that the value of the handset market would fall in euro terms this year, a result of a weaker dollar, sluggish U.S. economy and a potential economic slowdown in Europe.

Qualcomm''s president, Steve Altman, said the company appeared to faring better than some rivals because it was more focused on a technology known as code division multiple access, or CDMA, which is popular in the U.S. and Asia. He said the shaky U.S. economy hasn''t hurt sales.

"The (mobile) handset seems to be more of a staple than a luxury item," he said in an interview.

Some analysts were unimpressed by Qualcomm''s profit forecasts because they didn''t seem to match its strong revenue estimates. Altman said that Qualcomm would spend more on research and development and that lower interest rates would result in less investment income, weighing on profits.

The results were released after markets closed Wednesday. Qualcomm shares rose 0.8 percent, or 34 cents, to $41.89 on the Nasdaq Stock Market, then surrendered 90 cents after hours.

For its third quarter, the San Diego-based company predicted a profit of between 50 and 52 cents a share, compared to analyst estimates of 51 cents a share, excluding charges for stock-based compensation and its strategic investment unit.

Qualcomm predicted third-quarter revenue of between $2.5 billion and $2.7 billion, above the average analyst estimate of $2.47 billion.

For the fiscal year, Qualcomm raised its profit estimate to between $2.04 and $2.09 a share from $2.01 to $2.07 a share, excluding certain charges. Analysts were expecting $2.09 a share.

The company raised its annual revenue forecast by $400 million to between $10 billion and $10.4 billion. Analysts were expecting $9.94 billion.

Qualcomm has less exposure in Europe than its rivals, which shields it from any economic ills there, said Mark McKechnie, a securities analyst at American Technology Research in San Francisco.

And a weak U.S. currency helps Qualcomm because sales outside the U.S. translate into more dollars, while Nokia doesn''t benefit as much from that phenomenon because it reports results in euros, McKechnie said.

Qualcomm has had its biggest success in the U.S., through carriers including Verizon Wireless and Sprint Nextel Corp., and in Asia.

Qualcomm''s results were "kind of a nice progress report ... in a tricky market," said McKechnie.

Qualcomm makes chips for mobile phones and licenses its patented technologies to other companies. It makes much of its money from royalty payments, which has led to fierce legal battles with rivals who say Qualcomm is overpaid.



Source: AP News