Qualcomm posts higher first-quarter revenue, says year on track
SAN FRANCISCO (Reuters) - Leading mobile chipmaker Qualcomm Inc posted higher fiscal first-quarter revenue that slightly missed expectations as smartphone growth shifted to China but it bumped up its full-year earnings outlook on the strong start to 2014.
With growth in the smartphone industry moving away from wealthy markets such as the United States and toward China and other emerging economies, where consumers favor less expensive devices, Qualcomm has been focusing on costs to preserve its profit margins.
Qualcomm slightly raised its full-year forecast for earnings per share to a range of $5.00 to $5.20, from $4.95 to $5.15, essentially adjusting for first-quarter earnings that came in above the company's own previous estimate.
"We raised the full-year EPS guidance but really just to reflect the positive results of Q1. We see the rest of the year playing out pretty much in line with our original expectations," Chief Financial Officer George Davis said in an interview.
Qualcomm had first-quarter net income of $1.88 billion, down 2 percent. GAAP diluted earnings per share were $1.09. Its non-GAAP earnings per share were $1.26, above its previous forecast of between $1.10 and $1.20.
On Monday, lower-than-expected holiday iPhone sales and a weak revenue forecast by Apple Inc renewed fears on Wall Street about Chinese demand and a tepid global market.
While the majority of Qualcomm's revenue comes from selling baseband chips that let phones communicate with carrier networks, most of its profit comes from licensing patents for its ubiquitous CDMA cellphone technology. As phone prices edge lower, Qualcomm receives less royalty revenue.
Average prices for cellphones in the September quarter, used to calculate licensing revenue for Qualcomm in the December quarter, were between $219 and $225, the company said.
The chipmaker on Wednesday reported first-quarter revenue of $6.62 billion, up 10 percent from the year-ago period. Analysts on average had expected first-quarter revenue of $6.665 billion, according to Thomson Reuters I/B/E/S.
It said revenue in the fiscal second quarter, which ends in March, would range from $6.1 billion to $6.7 billion.
Analysts on average had expected first-quarter revenue of $6.665 billion and second-quarter revenue of $6.723 billion, according to Thomson Reuters I/B/E/S.
Qualcomm shares were up 2.8 percent in extended trading after closing down 1.21 percent at $71.12 on Nasdaq.
(Reporting by Noel Randewich; editing by Andrew Hay)