(Adds comment from CEO, rewrites first paragraph)
By Noel Randewich
SAN FRANCISCO, July 24 Qualcomm Inc
posted third-quarter revenue that beat expectations and earnings
that matched them to ease concerns about slower growth of
smartphone sales and help push the leading mobile chipmaker's
shares up more than 4 percent.
Few semiconductor companies have benefited more from the
mobile revolution than Qualcomm, but the supplier of chips for
Apple Inc's iPhones and Android devices has begun to
face pressure as growth in smartphone sales shifts to Asia.
In its fiscal third-quarter report on Wednesday, Qualcomm
met analysts' expectations for earnings and was ahead on
"It looks like momentum is continuing. It doesn't feel like
the smartphone story is over," Bernstein analyst Stacy Rasgon
In Apple's quarterly report on Tuesday, the Cupertino,
California, company said it sold more iPhones than Wall Street
had expected. Samsung Electronics Co, which overtook
Apple to become the world's largest smartphone maker in 2012,
had fueled concerns about smartphone sales when it issued a
disappointing earnings forecast earlier this month.
"There seems to be some concern that developed regions are
becoming saturated with smartphones," Qualcomm CEO Paul Jacobs
said on a conference call with analysts.
He went on to say that over the long-term, Qualcomm expects
only a modest decrease in smartphone replacement rates in
developed countries thanks to incentives offered by carriers to
Qualcomm said average selling prices for phones were rising
in developed countries and in emerging markets.
Network operators worldwide are shifting to a high-speed
wireless technology known as long-term evolution (LTE) that
Qualcomm is a leader in, helping the company grow much faster
than Intel Corp and other suppliers of chips for
But Qualcomm faces competition from small Asian mobile
chipmakers as well as dominant PC chipmaker Intel, whose mobile
push is showing promising signs after failing to attract device
makers in recent years.
Shares of Qualcomm are about flat year to date and trade at
about 13 times expected earnings. Intel's stock has risen about
10 percent in 2013 and now trades at about 12 times earnings.
"We watch those who we consider our competitors very
closely," said Qualcomm Senior Vice President Bill Davidson.
"Intel hasn't seen great success in terms of market traction yet
but we clearly watch them just based on their capabilities."
Google said on Wednesday it is using a Qualcomm Snapdragon
processor in the newest version of its high-profile Nexus 7
Qualcomm posted fiscal third-quarter revenue of $6.24
billion and net income of $1.58 billion, or 90 cents a share,
boosted by growing demand for smartphones in Asia.
It said revenue in the current quarter, which ends in
September, would range from $5.9 billion to $6.6 billion.
Analysts on average had expected third-quarter revenue of
$6.055 billion and fourth-quarter revenue of $6.293 billion,
according to Thomson Reuters I/B/E/S.
"This is better than the Street had been girding for, given
what's been going in the smartphone markets," said Williams
Financial analyst Cody Acree.
For the fiscal third quarter, non-GAAP earnings per share
were $1.03, in line with expectations.
Qualcomm estimated fiscal 2013 non-GAAP earnings of $4.48 to
$4.56 per share. Its previous forecast was $4.40 to $4.55.
Shares of Qualcomm rose 4.33 percent in extended trade after
closing down 1.46 percent at $61.39 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang and Bob