Qualcomm sees profits surge on phone demand
The cellular phone firm says fiscal third-quarter profit surged more than fivefold on strong demand for cell phones and the chips that run them.
Profit from operations in the quarter ended June 27 rose to $134.9 million, or 75 cents a share, from $24.7 million, or 17 cents, a year earlier. That beat the 63-cent average estimate of analysts polled by First Call. Estimates ranged from 56 cents to 68 cents.
Sales rose 15 percent to $1 billion from $875.5 million. Qualcomm said the growth came from demand for cell phones and semiconductors for cell phones, as well as royalties from other companies that use its technology.
The stock has been gaining since March, when the company settled a patent dispute with No. 3 cellular-phone maker Ericsson, which also agreed to buy Qualcomm's money-losing cellular network equipment business.
Qualcomm said it shipped 1.7 million phones during the quarter and 11 million chips. Phone sales were hurt somewhat by parts shortages, which could also limit fourth-quarter results, the company said.
Royalty payments almost doubled to $93 million from $47 million a year ago.
The higher earnings are expected to boost the company's tax rate to 35 percent in the year ending Sept. 30, from 30 percent in fiscal 1998.
After a pretax charge of $117 million, or 40 cents a share, for the network unit sales, Qualcomm had net income of $58.9 million, or 35 cents. A year earlier, net income was $6 million, or 8 cents a share, including charges to write down the value of some investments.
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