Qualcomm shares soar on earnings report

The company reports that fourth-quarter earnings rose 10 percent, exceeding analyst expectations, which sends the stock soaring after hours, even as revenues fell from year-ago levels.

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Qualcomm reported Thursday that fourth-quarter earnings rose 10 percent, exceeding analyst expectations, which sent the stock soaring after hours, even as revenues fell from year-ago levels.

Pro forma earnings for the period, excluding nonrecurring items, were $200.8 million, or 25 cents per share, on revenues of $635.4 million. That compares with pro forma earnings of $182.9 million, or 24 cents per share, on revenues of $716.3 million for the same period a year ago.

Analysts expected Qualcomm to earn 24 cents per share, according to a survey by First Call/Thomson Financial.

At 1 p.m. PST, the close of regular market trading, Qualcomm shares were up more than 2 percent to $62.81. The earnings report was issued after the close of regular trading. In after-hours trading, Qualcomm shares were substantially higher, up more than 10 percent to $68.

Qualcomm chief executive Irwin Jacobs attributed the better-than-expected report to the company's royalty fee growth and rebounding chip sales, despite a weaker Korean market.

"This year we continued to focus on improving profitability while investing in areas of future growth," Jacobs said in a statement.

Analysts have been watching the company closely for signs of a slowdown in Korea, one of Qualcomm's largest markets. The Korean government recently cut subsidies on the phones there, raising prices and causing concern about Qualcomm's sales.

Indeed, the company's total quarterly revenue fell 11 percent from the year-ago period, attributable to lower sales in South Korea. Qualcomm's chip sales fell to 11 million units this quarter, down from 14 million chips during the 1999 fourth quarter. Qualcomm said sales elsewhere were strong.

But after-hours investors reacted to positive forecasts from the company. Executives forecast that chip sales would bounce back to 14 million units during the first quarter. Executives also said they are "comfortable" with the consensus earnings per share estimate of 28 cents for the first quarter of next year and with fiscal 2001 estimates.

Earlier Thursday, Qualcomm announced that the IPO for its semiconductor unit spinoff, which was expected this fall, would be delayed until at least January. The company cited unfavorable market conditions.

The overall wireless market has been dragged down in recent months by concerns about cell phone and chip sales, as well as with the overall technology downdraft. Qualcomm, a highflyer last year, has seen its stock slide along with others.

The company also signed a pact Thursday with Kyocera, ensuring that the Japanese handset maker will use Qualcomm's third-generation, or 3G, high-speed data and voice wireless technology.

After selling many of its infrastructure business segments, Qualcomm is increasingly a non-manufacturing, royalty-based technology company. 3G deals, such as the one with Kyocera, will be critical to the company's future success.

Qualcomm said it signed 28 new licensing deals--13 in the large Chinese market--this year, and that revenue from royalties increased and now represent a larger percentage of revenue this quarter despite the Korean slowdown.