Qualcomm outlook misses as cell phone demand slows

NEW YORK (Reuters) - Qualcomm Inc (QCOM.O) gave a disappointing profit outlook for the current quarter and the year ahead, indicating that the economic crisis could have a prolonged impact on cell phone demand.

Chief Executive Paul Jacobs said problems arising from the credit crunch would likely last a few more quarters, and shares of Qualcomm, which supplies wireless chips and technology licenses, fell 3.5 percent.

Qualcomm forecast fiscal 2009 revenue at $10.2 billion to $10.8 billion, compared with the average analyst forecast of $12.1 billion, according to Reuters Estimates.

It saw pro forma earnings for the fiscal year that began on September 29 at between $2.00 and $2.10 per share, far below the average Wall Street forecast of $2.56.

"While we continued to see strong growth in CDMA, the current macroeconomic conditions and potential for further economic slowdown creates an uncertain business environment for the next few quarters," Jacobs told analysts on a conference call.

A credit crisis and economic uncertainty means sales of wireless gadgets would likely be slower in 2009 than previously thought, he said, adding that he saw a "significant contraction" in customers' inventory in the first two quarters.

The company also said consumers seem to be replacing their handsets slower than they used to. The average replacement cycle for CDMA devices is now over 2 years, it said.

"As the economy gets worse and people become more panicked about their jobs, you can expect things to slow down," said Ed Snyder, analyst at Charter Equity Research.

Qualcomm forecast first-quarter pro forma earnings per share, before items such as its investment arm, of 46 cents to 50 cents, on revenue of $2.3 billion to $2.5 billion.

Analysts on average had expected first-quarter earnings of 61 cents a share on revenue of $2.9 billion.

The poor outlook overshadowed quarterly earnings that beat Wall Street expectations.

For the fourth quarter ended September 28, Qualcomm posted a net profit of $878 million, or 52 cents a share, down 22 percent from a year earlier.

Excluding items, Qualcomm said its profit was 63 cents per share. Analysts, on average, had forecast 60 cents a share, according to Reuters Estimates.

Quarterly revenue rose 45 percent to $3.3 billion.

Qualcomm said it was helped by a previously announced technology licensing agreement with leading mobile phone maker Nokia (NOK1V.HE), a move that settled their long-standing legal battles.

Shares of Qualcomm fell to $31.91 in extended trading, after closing down 6.03 percent at $33.05 on Nasdaq. Shares of rival Texas Instruments Inc (TXN.N) rose around 5 percent after-hours from its closing price of $17.14, recouping some of its intraday losses on the New York Stock Exchange.