* Q3 EPS $0.85 vs Street view $0.86
* Company cuts semi volume target for Q4, eyes strong Dec
* Says Q4 outlook hurt by inventory correction before big
* Shares rise about 6 pct in late trade
By Sinead Carew
NEW YORK, July 18 Qualcomm Inc cut its
revenue and earnings forecast for the current quarter on
weaker-than-expected demand for semiconductors, but investors
took heart as it said that sales would improve for a strong last
quarter of 2012.
Qualcomm shares rose 6 percent in late trade after the
leading provider of chips for cellphones said it expects a
"strong December quarter" as it will have overcome a shortfall
in its advanced chip supply by year end.
The San Diego-based company is expected to supply chips for
the next Apple Inc iPhone model, which analysts widely
expect to go on sale in time for the holiday shopping season.
Qualcomm said it expects big smartphone launches to boost
chip sales in the holidays despite a weaker economic outlook.
It said that lower-than-expected sales in the current
quarter would be mostly due to customers' cutting inventory to
prepare for new holiday product launches.
"We think there's a number of flagship devices that phone
manufacturers will be launching. Like last year the consumer
uptake was quite strong so we're expecting a similar situation
this coming December" Chief Financial Officer William Keitel
told Reuters, but declined to name the phone makers.
"They're saying everything they can to point to Apple
without saying Apple," said Charter Equity Research analyst Ed
Snyder. "People are looking past the current quarter into the
holiday season and they like what they see."
28 NANOMETER RAMP UP
Qualcomm also said it had made big progress in expanding its
chip manufacturing capacity. The company warned in April that it
would lose out on a lot of revenue as it was unable to meet
demand for advanced chips due to a 28 nanometer manufacturing
capacity shortfall at contract manufacturer TSMC.
Keitel said that Qualcomm is now ramping up production of 28
nanometer chips with four different manufacturing companies.
Analysts said this was good enough news that it distracted
investors from the weakness in the current quarter.
Investors also appeared to overlook Chief Executive Paul
Jacob's admission on a conference call that it had to inform
U.S. regulators that it gave gifts or other benefits to people
associated with state-owned companies or agencies in China.
The finding was part of an investigation that Qualcomm says
arose from a "whistleblower's" allegations made in December 2009
to the company's audit committee and regulators.
Qualcomm said it believes the total monetary value of the
benefits in question to be less than $250,000. Jacobs said he
was unable to predict the outcome of the investigation.
OUTLOOK CUT, AN INVENTORY ISSUE
Qualcomm cut its revenue target for its fiscal full year
2012, which ends in September to a range of $18.7 billion to
$19.1 billion from $18.7 billion to $19.7 billion.
It cut its non-GAAP earnings per share target to a range of
$3.61 to $3.67 from its prior target of $3.61 to $3.76.
Another analyst, James Faucette of Pacific Crest Securities,
said investors were brushing off the worse-than-expected fiscal
fourth-quarter outlook and focusing on the fact "that the ramp
in 28 nanometer chips is happening."
Qualcomm posted a profit of $1.207 billion, or 69 cents per
share for its second quarter ended June 24, compared with a
profit of $1.035 billion or 61 cents per share in the year-ago
Excluding certain items, Qualcomm earnings per share would
have been 85 cents compared with Wall Street expectations of 86
cents, according to Thomson Reuters I/B/E/S.
Revenue rose to $4.63 billion from $3.62 billion, compared
with analyst expectations of $4.677 billion.
Qualcomm shares rose to $59.28 in late trade after closing
at $56.05 in regular Nasdaq trade. The stock had fallen 16
percent from its $66.99 close on April 18 just before it warned
of the 28 nanometer shortage.