Qualcomm buoyed by global growth in 3G

Qualcomm, the largest wireless chipmaker, said on Wednesday the mobile phone industry had reached a “transformative stage” as it reported third-quarter sales and profits ahead of expectations.

However, it hinted that its venture into mobile television might have been an expensive flop as it announced it was in talks with partners about FLO TV’s future.

The San Diego-based company reported $2.7bn in revenues, beating analyst expectations of $2.63bn, according to Thomson Reuters.

Earnings of 57 cents a share were 3 cents ahead of Wall Street forecasts.

Qualcomm rose 5 per cent on the news in extended trading in New York to $38. The shares are down 25 per cent on a year ago.

“This is an exciting time in the wireless industry,” Paul Jacobs, chief executive, told an analyst conference call. “We are at a transformative stage in the industry as people increasingly use their 3G devices to stay connected.”

There were positive trends, he said – the rapid expansion of mobile data usage, network technologies coming online to meet the demand for more capacity and the 3G footprint becoming global with licences awarded in India.

New types of devices were emerging that used 3G, he said, in a reference to eReaders, netbooks and devices such as Qualcomm’s own Personal TV product.

Qualcomm stood to benefit with its technology licensing and modem chips from the number of wireless subscribers passing 5bn, with 1bn being on 3G devices, supported by 85 per cent of the world’s networks.

The company said it had shipped a record 103m modem chips based on its CDMA technology in its third quarter and it raised sales and profits guidance for the fiscal year.

It expected sales to rise in a range with a midpoint of $2.85bn, compared to $2.7bn previously, while profits were forecast to rise by about 80 per cent on a year ago to $2.33-$2.37 per share up from $2.2-$2.32.

Qualcomm has poured hundreds of millions of dollars into its FLO TV service, building a network infrastructure and striking content deals in the US, but making little impression overseas.

Its chips and service is embedded in Verizon and AT&T phones and its Personal TV device, but Mr Jacobs admitted recently that take-up of the service had been disappointing.

The tenor of his remarks to analysts on Wednesday suggested Qualcomm was prepared to dispose of the service or find other uses for it.

“We are in discussions with a number of partners regarding the future direction of the business. We are considering a number of alternatives,” he said.