Qualcomm raises third-quarter forecast

The company's improved outlook comes as worldwide shipments of cell phones are on the rise, driven by demand for features such as color screens and cameras. Qualcomm, which develops cellular phone chips, is riding the wave of that demand.

The San Diego-based company raised its quarterly revenue forecast to a range of $1.28 billion to $1.3 billion, which would reflect growth of 44 percent to 46 percent, compared with the same period last year. The company's previous estimate was for growth of between 41 percent and 44 percent. Qualcomm's third quarter ends June 27.

Analysts had expected the company to report revenue of $1.27 billion for the period, according to Thomson First Call.

Qualcomm also revised its net income forecast to between 51 cents per share and 53 cents per share, compared with its earlier estimate of between 48 cents per share and 50 cents per share. Wall Street had expected the company to report earnings of 50 cents per share.

The company attributed its improved performance to three areas of its business.

First, royalties from Qualcomm's Wideband Code Division Multiple Access technology has been stronger than expected. W-CDMA is a standard used in cell phones that allows for data transmission speeds of up to 2 megabits per second.

Qualcomm's Mobile Station Modem phone chips, or series 6000 chips, are also experiencing an increase. The company now expects quarterly shipments of between 34 million and 35 million, compared with its earlier forecast of 33 million to 35 million.

And the company's cell site modem business piggybacked on that performance. Sales of the device, which supports the ability of customers to perform video telephony, instant multimedia chat and 3D network gaming, have been stronger than expected.