NEW YORK (Reuters) - Wireless chip maker Qualcomm Inc posted better than expected quarterly results and raised its full-year financial targets on improving demand for advanced phones, and its shares rose 5 percent.
The company, which also sells technology licenses, said demand was strong in most regions of the world and that investor concerns about the wireless phone sales fall-out from massive earthquake in Japan were overdone.
“It was a very strong quarter,” said Williams Financial analyst Cody Acree who also noted that the boost to guidance was a good sign for the wireless industry.
“It quells any fears of cellphone weakness similar to Intel’s quieting of concerns about PC weakness,” he said referring to a bullish forecast from personal computer chip giant Intel Corp the day before.
Qualcomm’s Chief Financial Officer William Keitel said demand for high-speed wireless devices was stronger than expected in every region around the globe, helping both its chip and licensing business.
“The total market for 3G devices grew at a much faster pace than we expected and the licensing business benefited very nicely from that,” Keitel told Reuters in an interview.
Several analysts said China was a key factor in Qualcomm’s strong growth in the quarter.
Analysts had also been expecting strong second-quarter growth partly due to the launch of the first Apple Inc phone using Qualcomm chips and being sold by Verizon Wireless, a unit of Verizon Communications and Vodafone.
While Keitel said iPhone was helping Qualcomm’s business he would not comment specifically on the Verizon device.
Qualcomm raised its fiscal 2011 revenue target to a range of $14.1 billion to $14.7 billion from its previous expectation for $13.6 billion to $14.2 billion.
It forecast 2011 earnings per share in a range of $2.51 to $2.59 up from its previous expectation for $2.32 per share to $2.46 per share.
Some investors had worried that industry supply issues stemming from the Japan earthquake would hurt Qualcomm’s growth this quarter but Keitel said Qualcomm was not affected.
However the company said that some of its customers were having supply issues in Japan. If they manage to overcome these issues, it would result in higher chip sales, it said without giving specific estimates.
“The impact we’re able to see from our vantage point doesn’t seem to equate to the level of investor anxiety we’ve been seeing,” Keitel said.
Specific to the U.S. however, the executive said one “pleasant surprise” was strong smartphone upgrades at smaller operators such as Leap Wireless and MetroPCS, which tend to cater to more budget conscious customers.
Qualcomm on Wednesday posted net earnings of $999 million, or 59 cents per share, for its second quarter ended March 27 compared with a profit of $774 million, or 46 cents per share in the year-ago quarter.
Excluding unusual items, it earned 86 cents per share compared with Wall Street expectations for 80 cents, according to Thomson Reuters I/B/E/S.
Revenue rose to $3.88 billion from $2.66 billion in the same quarter the year before and was ahead of analyst expectations for $3.6 billion, according to Thomson Reuters I/B/E/S.
Qualcomm shares rose to $58.17 in after-market trading after already rising 3.5 percent to finish at $55.27 in the regular Nasdaq session.
Reporting by Sinead Carew; editing by Carol Bishopric