Qualcomm profit up 35% on smartphone wave

Qualcomm beat Wall Street expectations and raised its 2013 guidance as the world’s biggest chipmaker for handsets rode the smartphone wave to benefit from its leadership in 4G wireless technologies.

The company reported record quarterly revenues of $6.02bn, up 29 per cent on a year ago and ahead of Wall Street expectations of $5.9bn.

Net income of $1.91bn and earnings per share of $1.09 were up 35 per cent and beat an analyst consensus of 97 cents, according to Bloomberg data.

Qualcomm shares rose 6.5 per cent to $67.65 in after-hours trading in New York.

“The wireless business is booming and even if they don’t sell their own wireless chips, they get royalties from anybody licensing 2G, 3G and 4G technologies, so that’s a pretty good business to be in right now,” said Patrick Moorhead, semiconductor analyst at Moor Insights.

The company predicted revenues for the current fiscal second quarter in a range where the midpoint would see a 22 per cent rise to about $6.05bn, with earnings per share of about $1.02. Analysts had expected profits of 94 cents a share on sales of $5.87bn. Qualcomm also raised its revenue guidance for the fiscal year by $400m.

Steve Mollenkopf, Qualcomm president, said demand for smartphones was not being affected by any macroeconomic uncertainty. “In many places around the world, people will forgo a lot of purchases before they forgo a smartphone,” he told the Financial Times.

Analysts estimate Qualcomm has a lead of up to two years over the competition in its integration of the various wireless standards, including 4G LTE, in its chipsets.

Mr Mollenkopf said shipments of these “multimode” chips that included LTE were up more than 90 per cent on the previous quarter.

Paul Jacobs, chief executive, said the company was making excellent progress in China and saw plenty of opportunity ahead – smartphone sales rose 115 per cent year-on-year in the third quarter of 2012 there and Qualcomm chips are in 14 out of 31 devices selected for LTE trials in China.

Over the holiday season, its chipsets featured in popular smartphones including the Samsung Galaxy S III, the Nexus 4, and Nokia Lumia.

More than 600 devices have been announced featuring Qualcomm’s Snapdragon processors and another 450 are in development, the company said.

Qualcomm also announced the retirement of Bill Keitel, chief financial officer for the past 11 years. He will stay on until March, when George Davis, currently CFO of chip equipment maker Applied Materials, will take over the role.