Qualcomm Inc. (NASDAQ: QCOM), the world largest phone-chip maker, is scheduled to release its fiscal third quarter earnings after the closing bell on Wednesday, July 21, 2010. Analysts, on average, expect the company to report earnings of 54 cents per share on revenue of $2.63 billion. In the year ago period, the company reported earnings of 54 cents per share on revenue of $2.74 billion.
Qualcomm Inc. engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. The company operates in four segments: Qualcomm Code Division Multiple Access Technologies, Qualcomm Technology Licensing, Qualcomm Wireless and Internet, and Qualcomm Strategic Initiatives.
Thanks in part to a surge in demand for mobile phones and computers, worldwide semiconductor sales reached a record $24.7 billion in May, up 4.5 percent from the prior month and a gain of 47.6 percent year over year, the Semiconductor Industry Association said recently. The SIA last month predicted that sales of microchips will rise 28 percent to $290.5 billion this year. Similarly, market research firm Gartner recently raised its 2010 forecast for global semiconductor revenue, citing better-than-expected market recovery. Global semiconductor market is now indicated to grow 27.1% in 2010 to reach $290 billion. In February, the firm expected worldwide semiconductor revenue for 2010 to grow by 19.9% over 2009.
In the preceding second quarter, the San Diego, California-based company reported net income of $774 million, or 46 cents a share, compared with a loss of $289 million, or 18 cents a share, in the year-ago quarter. On an adjusted basis, the company earned 59 cents a share. Revenue climbed to $2.7 billion from $2.45 billion in the same quarter the previous year. Analysts, on average, expected the company to report earnings of 57 cents a share on revenue of $2.63 billion.
In April, the company said that it expects third quarter net income in the range of 40 cents to 44 cents per share and revenue in the range of $2.50 billion to $2.70 billion. On a pro forma basis, earnings are expected to be in the range of 51 cents to 55 cents per share on revenue of $2.50 billion to $2.70 billion. For the full year 2010, the company expects earnings in the range of $1.71 to $1.82 per share. On a pro forma basis, earnings are expected to be in the range of $2.21 to $2.32 per share. The guidance appears to be conservative, given the accelerated growth in smartphone market and increased 3G adoption in emerging markets.
According to market research firm iSuppli, smartphone shipments are expected to grow 35.5 percent from 2009's 182 million to an expected 247 million shipments in 2010. Qualcomm's chipsets are used in majority of Android-based smartphones. The company's next-generation snapdragon platform is making tremendous progress. A number of groundbreaking devices like Google's Nexus One, the HTC Incredible, Sprint's EVO 4G and the Dell Streak tablet are powered by Snapdragon processor.
Qualcomm also stands to benefit from growing demand for 3G data services. The company collects a royalty for every 3G device sold worldwide. In addition, it holds patents on CDMA technology and earns royalties on all CDMA mobile phone sales.
Among other developments, the company recently announced that it won the bid for wireless airwaves in four telecom circles in India. The company plans to create Long Term Evolution or LTE network, in concert with 3G devices to support India's broadband goals.
In terms of stock performance, Qualcomm shares have lost nearly 25 percent since the beginning of the year.
Disclosure: Author doesn't own any of the stocks discussed here.
