Qualcomm reports sharp gains

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Strong growth in worldwide mobile phone shipments helped Qualcomm, the leading US wireless technology group, report sharp gains in fiscal fourth quarter revenues and net earnings on Wednesday.

Qualcomm’s CDMA (Code Division Multiple Access) chips power mobile phones sold by Verizon and Sprint Nextel in the US and a growing number of other carriers around the world. The company has also invested heavily in the WCDMA technology found in many 3G handsets. Net profits jumped to $538m, or 32 cents a share, compared with $393m, or 23 cents a share in the same period a year ago on revenues that grew by 40 per cent to $1.56bn.

Looking ahead, the California-based company also forecast continued strong growth citing higher-than-expected handset shipments in the US and Brazil in particular.

As a result Qualcomm said it expects revenues to rise by between 18 per cent and 25 per cent next year. Profit excluding some costs in the fiscal first quarter will be 36 cents to 38 cents on sales of $1.67bn to $1.77bn, Qualcomm said.

"Our record financial results reflect the accelerating migration to CDMA throughout the world," said Paul Jacobs, chief executive. “As of September 2005, there were approximately 159 operators offering third generation services in 71 countries with over 200m subscribers."

Mr Jacobs said Qualcomm had made gains in both the markets for handsets based on its CDMA chips which now account for about a quarter of all the handsets sold worldwide, and in the market for 3G phones based on the WCDMA standard which generate royalties for Qualcomm. However that success has brought its own challenges.

Last week six telecoms equipment makers, including Ericsson and Nokia, called on the European Commission to investigate Qualcomm accusing the company of using its patents on 3G technology to shut out competition.

On Wednesday Mr Jacobs said Qualcomm has yet to receive the formal complaint but said the company wholeheartedly rejected the accusations that its licensing practices were unfair and that it had stifled innovation.“These suggestions are factually and demonstrably incorrect,” he said adding, “We are looking forward to the opportunity to shed some light on this.”

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